LNG custody transfer measurement explained.
LNG custody transfer is the measurement of cargo quantity and energy content at the point where commercial ownership changes hands. Because LNG cargoes carry high unit value, the accuracy of the measurement has direct commercial consequences for both buyer and seller. This guide explains how custody transfer measurement works, what the GIIGNL method requires, and why independent verification matters.
What is LNG custody transfer?
Custody transfer is the point at which commercial ownership of a commodity changes hands. For LNG, this occurs at the discharge jetty of an import terminal, at a floating storage and regasification unit (FSRU), or during ship-to-ship transfer. The measurement taken at that point determines the quantity and energy content of the cargo — and therefore the commercial settlement figure.
LNG cargoes are large. A standard LNG carrier holds between 60,000 and 180,000 cubic metres of LNG. At typical market prices, a 0.1% measurement error on a 140,000 cubic metre cargo represents a significant financial exposure — and that error compounds across every cargo in a long-term supply agreement. Accurate, traceable, and independently verified measurement is a commercial necessity.
How LNG custody transfer is measured
LNG custody transfer measurement follows the GIIGNL method — the framework published by the International Group of Liquefied Natural Gas Importers. The method determines the energy quantity of the cargo through four sequential calculations.
Liquid volume measurement
Tank level measurements are taken before and after loading or discharge using calibrated level gauges — typically float gauges or radar gauges — in both the ship's tanks and the shore storage tanks. The change in liquid volume is calculated from the tank calibration tables. This step is the primary source of measurement uncertainty in the calculation chain.
Composition sampling and analysis
LNG samples are taken from the cargo vapour or liquid at defined sampling points during the transfer. The sample is analysed by gas chromatography to determine the molar composition — the proportions of methane, ethane, propane, butane, nitrogen, and other components. Composition determines both density and calorific value.
Density calculation
LNG density is calculated from the measured composition and the measured liquid temperature, using thermodynamic equations specified in the GIIGNL Handbook (typically the Klosek-McKinley method). Density converts the measured liquid volume into a mass quantity, eliminating temperature-related volume variations.
Energy quantity determination
Gross calorific value (GCV) is calculated from the measured composition using the ISO 6976 method. Multiplying mass by GCV gives the energy quantity of the cargo — the figure used for commercial settlement in energy-traded contracts. Volume-based contracts use the mass figure directly or convert to a standard volume at defined reference conditions.
Two independent calculations — one settlement
In standard LNG custody transfer practice, both the ship and the terminal perform the full GIIGNL calculation independently — each using their own tank measurements, sampling results, and instrumentation. The two resulting figures — ship's figure and shore figure — are then compared.
The agreed settlement quantity is typically the ship's figure, the shore figure, or an average, as specified in the sale and purchase agreement. If the two figures differ by more than the contractually agreed tolerance, an investigation is required to determine the cause.
Persistent discrepancies between ship and shore figures — even within tolerance — indicate a developing measurement problem. Identifying and resolving the root cause early prevents the discrepancy from widening and creating a material commercial dispute across multiple cargoes.
Frequently asked questions
What is LNG custody transfer?
LNG custody transfer is the process of measuring the quantity and energy content of LNG at the point where commercial ownership changes hands — typically at ship-to-shore discharge or FSRU transfer. The measurement determines the settlement figure for the cargo.
What is the GIIGNL method?
The GIIGNL method is the measurement and calculation framework published by the International Group of Liquefied Natural Gas Importers for determining LNG cargo quantities. It defines procedures for measuring liquid volume, sampling for composition, calculating density, determining calorific value, and converting to an energy quantity. The GIIGNL Handbook is the primary reference standard for LNG custody transfer worldwide.
What is the difference between ship's figure and shore figure?
The ship's figure is the quantity calculated from tank level measurements on the LNG carrier. The shore figure is the quantity calculated from measurements at the terminal. Both are calculated using the GIIGNL method and compared at the end of the transfer. Persistent discrepancies between the two indicate a measurement problem requiring investigation.
Why does independent verification matter?
A 0.1% measurement error on a standard LNG cargo represents a material financial exposure for buyer or seller. Independent verification confirms that measurement methods and instruments comply with GIIGNL requirements and are producing consistent, accurate results — providing confidence in the settlement figure and early identification of systematic discrepancies.
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