ACCEPTANCE see INDICATION ADDITIVES An agent used for imparting new, or for improving existing, characteristics of oils. AFRA Average Freight Rate Assessment. The weighted average of the Charter Market levels of all tankers actually trading during a particular month, expressed in points of worldscale. AFRA is published by the London Tanker Brokers panel. ALEP Arab Light Equivalent Price. Used as a measure of the relative worths of different crude oils. ALKYLATION A process in which hydrocarbons with double bonds (C=C), mainly propylene & butenes are combine catalytically with saturated hydrocarbons, mainly iso-butane. ANILINE POINT The aniline point is the lowest temperature at which the oil under test is completely miscible with an equal volume of aniline. The test is a measure of the paraffinic hydrocarbon content of an oil. The higher the temperature the higher the paraffinic content. Aniline points are used in the calculation of the Diesel Index. API American Petroleum Institute. API GRAVITY The universally accepted scale adopted by the American Petroleum Institute for expressing the specific gravity of oils: API gravity = (141.5/Specific Gravity at 60F) - 131.5 ARA Amsterdam / Rotterdam / Antwerp range. ARBITRAGE The simultaneous purchase and sale of similar or identical commodities in two different markets, taking advantage of differences between the markets to make low risk profit. ARGUS A publication containing market information and oil prices. Argus prices are often used as an independent reference source in the pricing mechanism for oil deals. They are expanding into natural gas from 1/9/95. AROMATICS A group of hydrocarbons, of which benzene is the parent. They are called "aromatics" because many of their derivatives have sweet or aromatic odours. These hydrocarbons are of relatively high specific gravity and possess good solvent properties. Certain aromatics have valuable anti-knock characteristics. Typical aromatics are: benzene, toluene, xylene. ASTM American Society for Testing Materials. This organisation is responsible for the issue of many of the standard methods used in the petroleum industry. ATG Aviation Turbine Gasoline. ATK Aviation Turbine Kerosine. Other names are Jet Al and Autar. ATMOSPHERIC RESIDUE The residue or bottoms fractions from a CDU. AVIATION GASOLINE Also known as Aviation Spirit and Avgas. Special blended grades of spirit suitable for use in aircraft engines. These fuels have high anti-knock ratings, high stability, high overall volatility and low freezing-points. BACK-TO-BACK Where a trader buys a cargo in the knowledge that he already has a specific buyer or outlet for the cargo. Provided that the terms of the purchase are the same as those of the sale, the trading risk is small. BACKWARDATED A market is said to be backwardated when the future prices are expected to be lower than the current prices. BALLASTING Ballasting involves taking ballast (water) into either separate segregated tanks or into cargo tanks. BARE BOAT CHARTER Charterer hires a vessel for a long period, appoints the master and crew and pays all operating expenses. BARGE Oil carrying vessel of up to 7,000 tonnes capacity, employed on lakes and rivers. BARREL A unit of volume measurement for crude oil and products equal to 42 US gallons. 6.29 bbls = 1 cubic metre. BATCH A measured amount of oil in a pipeline. BEAR One who anticipates a price or market decline. BENCHMARK CRUDE One of three crude oils, West Texas Intermediate - WTI, Brent and Dubai, use as price references in the trading of oil. The crudes tend to be stable in quality and so simplify bargaining. WTI is a sweet oil produced in Texas and Oklahoma, Brent is sweet and lower priced, it comes from the north sea. Dubai is lowest in price and is heavy and sour, named after it's country of origin. BENZENE An aromatic hydrocarbon consisting of six atoms each of carbon and hydrogen arranged in a ring structure. It is a volatile, colourless and highly flammable liquid. It is a natural component of crude oil with additional amounts produced during refining, mainly by catalytic reforming. There is widespread concern over the potential health effects of benzene since prolonged occupational exposure to high levels in the past has caused serious blood disorders. For this reason exposures are now strictly controlled to low levels to reduce the likelihood of such effects occurring. The current UK occupational exposure limit for benzene is 5ppm (1995). BENZINE Often termed SRB, Straight Run Benzine. This is a straight run petroleum spirit boiling within the range 70-180°C, and used as cat. reformer feedstock. BID/OFFER A buyer bids the price he is prepared to pay for a commodity, whereas a seller offers the price at which he is prepared to sell a commodity. BILL OF LADING (B/L, BL) The document of title to goods in a contract between buyer and seller, not to be confused with the Charter Party, of which the Bill of Lading forms part. It further serves as a receipt from the carrier for the goods being despatched. The term is specific to sea transport; air freight documentation is different. B/L DATE The date on the Bill of Lading. The date defines when loading is finished. B/L QUANTITY The quantity of oil loaded onto the vessel as measured at the load port. This quantity appears on the Bill of Lading. BITUMEN or ASPHALTIC BIT A mixture of extremely heavy (high ave. molecular weight) hydrocarbons. They are usually black or dark brown in colour and solid or semi solid. These materials are usually obtained as residues from the refining processes. Used for road surfacing, roofing etc. BLACK OILS A general term applied to the heavier and darker coloured petroleum products such as heavy diesel fuel, fuel oil and some cylinder stocks. It is used mainly in connection with shipping and storage; a black oil tanker is one used for carrying "black oils" and which would require cleaning before being used for white oils. BLENDING Intimate mixing of the various components in the preparation of a product to meet a given specification. BLOWN BITUMEN A semi-solid or solid oxidised product obtained primarily by bubbling air through hot liquid bitumen, with a resultant increase in the melting-point and a modification of other physical properties. BNOC British National Oil Company - see OPA BOILING RANGE see DISTILLATION RANGE BOOK OUT In a trading chain where one company appears twice, they can agree to book out: the parties involved then only pay or receive the profit or loss associated with the deal and do not have to pay the full cost of the cargo. Once a deal is booked out no physical oil will pass down that part of the chain and so book outs effectively shorten chains making them more manageable, and reduce the risks involved for all parties. BOTTOMS The residue from a distillation of petroleum or the liquid layer left in a tank or similar container after draining to the level of pump suction. BOTTOM SETTLINGS Sludge collected at the bottom of a tanks or other oil containers which comprises an emulsified mixture of oil and water and sometimes wax, asphalt and mud. BOUNDARY LUBRICATION A state of lubrication existing when conditions of bearings, design, feed, load, and method of application of the lubricant do not permit the formation of a separating lubricant film by hydrodynamic action. Under these conditions, adsorption of the lubricant or of some of the active components of the lubricant upon the bearing surface, or the formation of low-shear-strength chemical compounds by the reaction of the components of the lubricant with the bearing surfaces, reduces the metallic contact and determines the character of the frictional resistance. BREATHING The movement of gas (oil vapour or air) in and out of the vent lines of storage tanks as a result of alternate heating and cooling. BRENT Crude oil from the Brent oilfield in the North Sea - the marker grade for Europe. (The grade from which other local crudes are priced). BRENT MARKET Probably the most actively traded crude market. In excess of 50% of world crude production is priced off Brent. BRIGHT STOCK A lubricating oil of high viscosity prepared from a cylinder stock by further refining, e.g. solvent de-asphalting, dewaxing, acid treatment and/or earth treatment. BROKER A broker in the International Oil business is a person (or company) who seeks to bring two parties together to close a piece of business. Usually, the broker is paid by the seller and is thus legally the seller's agent, but in certain circumstances the broker may be paid by the buyer. BS AND W 'Bottom Settlings and Water' comprises the solids and aqueous solutions which may be present in an oil and which are separable therefrom by means of gravity or the centrifuge. BUND An earthwork or wall surrounding a tank or tanks to retain the contents in the event of a fracture of the tank. BUNKER FUEL Any fuel oil or diesel fuel taken into the bunkers of ships. BUNKER FUEL OIL Heavy fuel oil used in ships. BUY BACK OIL Where an original equity holder has given up (for recompense) to the Government shareholding rights in a producing company, it sometimes retains, as part of the deal, the right to buy back some of the government's share. Such rights have generally been eroded, and replaced by straight purchase arrangements. BUY-BACK PRICE The purchase price paid by an oil company to the state for oil produced by the company, but owned by the state. CAAA Clean Air Act Amendments. US environmental legislation designed to improve air quality, in particular to reduce ambient air ozone & CO(Carbon Monoxide) levels. Latest amendment was in November 1990. CAP see OPTIONS Click here to view the Risk Management Cap tutorial CARBON RESIDUE This is a standard test method which is used to determine the amount of carbon which remains after combustion with a limited amount of oxygen. Two methods are in common usage being the Ramsbottom Method or the Conradson Carbon method. CARGO HEATING Due to the density or viscosity of certain types of hydrocarbons, e.g. Tia Juana Pesado crude oil, most bitumens etc, have to be kept at a high temperature to avoid solidifying. CATALYST A substance which if added to a chemical reaction promotes the rate of reaction without itself suffering any permanent chemical change. The use of a catalyst enables reactions to occur at lower temperatures or pressures. CATALYTIC CRACKING The process whereby heavy hydrocarbon molecules are broken down (cracked) into lighter molecules by passing them over a suitable catalyst (generally heated). CAT CRACKED SPIRIT Distillate fraction from the FCCU which blends to gasoline. Usually divided into two cuts, Light cat cracked spirit, or Heavy cat cracked spirit. CCU Catalytic Cracking Unit. Otherwise called Fluidized Catalytic Cracking Unit - FCCU. CDU 'Crude Distillation Unit' - The primary refining process, used to split crude oil into a number of constituent parts (called 'Fractions') each of which has its own distillation range. The resulting fractions are either blended directly or undergo further processing. CEILING In terms of the importation of mineral oil products, a ceiling is a quantitative limitation in tons below which mineral oil products can be imported duty free. In principle the import duty may be reimposed when these ceilings are exceeded. Ceilings are applied to the general system of preference (GSP) offered by the EEC to the developing countries. It should be noted that within the ceiling system the duty can be reimposed from one day to the next, without a period of grace. This means that if a shipment of products purchased EEC Qualified and shipped just before the date of reimposing and arrives after that date, the importer/buyer has to pay the import duty - (unless otherwise agreed between both parties). CERTIFICATE OF ORIGIN Within the framework of customs provisions (e.g. preferential duty treatment) a certificate as evidence of the fact that the products was produced in the county of exportation. This certificate, provided it is duly endorsed by a nominated authority (e.g. Chamber of Commerce, Customs) in the country of exportation, entitles the importer to gain preferential duties, which often means zero rates in the country of importation. This certificate can also be required by the importing country for other reasons, e.g. foreign exchange purposes or implementation of quantitative restrictions. It should be noted that in accordance with 'INTCOTERMS 1980' the seller is not supposed to supply the certificate spontaneously but only at the request of the buyer. The term EEC Qualified covers the obligatory supply of the certificate of origin by the seller. CERTIFICATE OF QUALITY Document defining the quality of the oil loaded on board a vessel; often produced by an independent inspector. CETANE INDEX As few refineries have cetane number test engines diesel specifications may also include a cetane index. The latest four variable method calculates the cetane index from the density at 15C and the 10%, 50% & 90% distillation temperatures measured by the D86 method. CETANE NUMBER A means of expressing the ignition quality of a diesel fuel. It is defined as the percentage by volume of cetane in a mixture of cetane and methyl naphthalene which has the same ignition quality when used in a n engine as the fuel under test. CFD A trade based on forecasting the difference between the Dated Brent quote in Platts and the next forward month quote during some future period. CHARTER PARTY The freight contract between shipper and ship owner, specifying method of carriage, terms and conditions, release instructions, details of consignee and agents, etc. CIF 'Cost, Insurance, Freight'; The term refers to a sale in which it is the seller's duty to delivery the oil on board vessel, to procure contact of affreightment and insurance for benefit of buyer and to direct vessel to named discharge port. Risk passes as oil passes vessel's permanent flange connection at loading port and property passes as documents pass. Buyer must provide a berth at discharge port and may be liable for demurrage if vessel is delayed. C&F Cost and freight. The seller must pay the costs and freight necessary to bring the goods to the named destination, but the risk of loss or damage to the cargo is transferred from the seller to the buy, where the goods pass the ship's rail in the port of loading. C&F LANDED As C&F but also including costs of unloading, lighterage and wharfage charges, which are to be paid by the consignor. CLEAN CARGO All refined products except bunker fuel and residuals. CLEAN OIL VESSELS Sometimes referred to as "White Oil Vessels". This term is applied to ships employed in carrying refined products, namely aviation fuels, gasolines, kerosines, some grades of gas oils and their components. CLOUD POINT The temperature at which a cloud or haze of wax crystals appears when the oil is cooled under prescribed conditions. Cloud point is of particular importance in storage and handling in outdoor tanks and ships' bunkers especially in cold weather, as the wax crystals formed can block filters and small bore fuel lines. COA Contract of Affreightment. This form of contract is used where the owner of a cargo has a need to transport a cargo of oil but has no tanker tonnage of his own. Therefore he contracts separately for his oil with his oil supplier and with another party to provide the tanker tonnage. COASTER A product vessel of less than 16,500 tonnes deadweight. COLD FILTER PLUGGING POINT C.F.P.P. The highest temperature at which the fuel, when cooled under the test conditions, either will not flow through the filter or requires more than 60 sec. for 10ml to pass through. COLLAR see OPTIONS Click here to view the Risk Management Collar tutorial COMPLIANCE Regulations set by the SFA. COMPULSORY STOCKS Stocks held by oil companies under government direction for strategic purposes. CONCAWE Conservation of Clean Air and Water, in Europe. The oil companies' European organisation for environment, health and safety. CONSIGNEE The party to whom goods are sent or consigned. CONSIGNOR The party despatching the goods. CONTANGO A market is said to be in contango when the future prices are expected to be higher than the current prices. CONTRACT FOR DIFFERENCE - C.F.D. A trade based on forecasting the difference between the Dated Brent quote in Platts and the next forward month quote during some future period. CONTRACTS Although contracts can be drawn up to meet any terms or requirements of the parties concerned, the majority conform to standard conditions and terms. Those relating to contract pricing have been codified by the International Chamber of Commerce, whose publication 'Incoterms' sets out international rules for interpreting the terminology and abbreviations employed. Some of these are explained elsewhere in this glossary, but these are the terms most frequently encountered. CRACKER Catalytic Cracker. Used for extracting high value products from the residue from a vacuum distillation unit. CRACKING Cracking is a chemical process whereby an hydrocarbon molecule is broken or cracked into smaller molecules by rupturing carbon-hydrogen or carbon-carbon bonds. Cracking processes are conducted under conditions of high temperature and pressure, please note that if pressure is not applied boiling or distillation only will occur. The products of cracking are more volatile than the feedstock. There are two basic cracking processes used, thermal cracking and Catalytic Cracking. Thermal cracking occurs at high temperatures (520-560°) and high pressures (about 13bar), Visbreaking is a thermal cracking process. Catalytic Cracking can be carried out at much lower temperatures and pressures (490-525°C & 2 bar). An example of this process is fluid Catalytic Cracking. CRUDE ASSAY A procedure for determining the general distillator and quality characteristics of a crude oil. CRUDE OIL The oil produced from an underground reservoir, after being freed of any gas which may have been dissolved in it under reservoir conditions, but before any other operation has been performed on it. In the oil industry, simply termed 'crude' or stabilised crude. CUT BACK Reduction in product viscosity by the addition of a suitable diluent of lower viscosity. CUT POINT The temperature at which a fraction boils. Front end cut point (FEC) denotes the temperature at which the fraction starts to boil, i.e. the lighter end of the cut. Back end cut point (BEC) denotes the heavier end of the cut point range. DATE RANGE The period for which the seller agrees to provide a cargo to the buyer. DATED BRENT Brent cargoes less than 15 days away from loading. An actively traded market. DATED TO PAPER see CONTRACT FOR DIFFERENCE DAY TRADE The purchase and sale of a contract on the same day. DEAD FREIGHT The freight rate which is paid on empty space in the vessel when the charterer is responsible for the freight rate of a full cargo. DEADWEIGHT TONNAGE Actual number of tons of cargo than can be put on board a ship to bring her down to the 'marks'. DEADWEIGHT TONNES Total carrying capacity of a ship in tonnes when loaded to the appropriate freeboard during the summer season. DEASPHALTING The removal of asphaltic constituents from residual stock for lubricating oil manufacture. It is a solvent refining process in which the asphalt is precipitated, usually by liquid propane. DEBALLASTING The discharging of unwanted water (ballast) from the vessel in order to:- - Free tanks to receive cargo; - Raise vessel out of water sufficiently to enable loading to begin. DECANT OIL The bottoms or residue from Catalytic Cracking which has been decanted after settling in tanks to allow any catalytic fines to drop out. DEHYDROGENATION The removal of hydrogen from a chemical compound; for example, the removal of two hydrogen atoms from butane to make butylene, and the further removal of hydrogen to make butadiene. DELIVERED (CIF) CIF delivered is not a term of international trade and should be avoided because of uncertainty as to its meaning and effect. DEMURRAGE Penalty for exceeding lay time conditions, i.e. the sum agreed by charterer to be paid as damages for delay of a vessel beyond the stipulated time for loading or discharging. DENSITY A physical property of material defined as the weight of a unit volume at a certain temperature, usually 15 °C. DERV FUEL A term applied in the UK to types of gas oil suitable for use as a fuel for high speed compression ignition engines. The term is an abbreviation of 'Diesel Engine Road Vehicle'. DESALTING Petroleum gas from which the more easily liquifiable components have been removed, either naturally or by processing. DESULPHURISATION The removal of sulphur or sulphur components from crude oil or its products. DEWAXING The removal of waxes from lubricating oil stocks, now usually carried out by filtration, at low temperature of a mixture of the oil and a solvent such as MEK (methyl ethyl ketone). DHT see Distillate Hydrotreater DIESEL FUEL A general terms covering oils used as fuel in diesel and other compression ignition engines. DIESEL INDEX This is a figure calculated from the Analine point and specific gravity which is used as a rough indication of the ignition quality of diesel fuel. DIP SAMPLE A sample obtained from a tank by lowering a specially designed sampling device into a tank. This method enables samples to be taken at specific depths in a tank. DIPPING The procedure employed to measure the depth of oil in a tank. Measurements are normally made with a graduate steel tape, dip-stick or dip-rod. DIRTY CARGO Generally applied to crude oil and residual fuel. DIRTY OIL VESSELS Sometimes referred to a 'Black Oil Vessels'. This term is applied to ships employed in carrying crude oils, fuel oil and diesel oils and some grades of gas oil. DISTILLATE HYDROTREATER - DHT. Removes sulphur from CDU overhead streams. DHT's may treat material upto or in some cases including the kero fraction. DISTILLATES The products obtained by condensation during the fractional distillation process i.e. the gaseous fuels, naphthas, kerosine and gas oil. DISTILLATION The process by which liquids are separated or purified by successive vaporisation and condensation. DISTILLATION RANGE A single pure substance has one definite boiling point at a given pressure. A mixture of substances will, however, exhibit a range of temperatures over which boiling or distillation, commences, proceeds and finishes. This range of temperatures, usually determined at atmospheric pressure by means of standard apparatus, is terms the distillation or 'boiling' range. DISTRESSED Term applied to someone who is under intense pressure to conclude a transaction (normally quickly), e.g. a refinery may be a distressed seller of gas oil if it has ullage problems. DOWNSTREAM Refers to petroleum operations after crude production i.e. refining and marketing. Contracts is upstream which is the exploration and production of crude oil. DRY GAS Petroleum gas from which the more easily liquifiable components have been removed, either naturally or by processing. EEC IMPORT DUTY Duty on petroleum products imported from non-EEC countries is levied as a means of providing revenue for the European Community. The present Common Customs Tariff (OCT) is fixed at 6% for high/medium oils and 3.5% for heavy oils. Whilst this may be taken as the general rule, there are however a number of exceptions, e.g. in the field of international aid to developing countries where the EEC has granted freedom of import duty by a combination of quotas and/or reduced duty levels on products which originate from developing countries. It should be noted that this duty system only applies to finished products as feedstocks destined for certain specified processes in refineries or chemical plants can be imported duty free. EEC QUALIFIED A current term in purchase and sale arrangements which means that the consignment in question is subject to preferential EEC duty treatment in the country of destination. This treatment can only be claimed if a Certificate of Origin is produced to the customs of the importing country. Preferential duty treatment can only be claimed for products originating in those countries that are parties to agreements/arrangements with EEC in which the latter has granted preferential treatment on imports into its territory. This treatment applies to products from virtually all countries with the exception of the USA, Japan, Australia, New Zealand, USSR, and East European countries (excluding Romania and Yugoslavia). EFP Exchange of Futures for Physicals. A futures contract provision involving swapping the delivery of physical product for a futures position. An EFP occurs during the futures contract trading period. ELSBM 'Exposed location single-buoy mooring', A floating chamber anchored near a production platform in order to serve as a flexible connection to a tanker taking on oil from the platform; such a system has no storage capacity. Also known as a single buoy mooring (SBM), a single-point mooring (SPM) or a conventional buoy mooring (CBM). END USER The ultimate consumer of petroleum products. ENTREPRENEUR An individual willing to exploit commercial opportunities whenever and wherever they arise. ESCALATION CLAUSE Clause that establishes how a basic agreed price shall actually be applied to a sale where there are differences in: - quality, eg. gravity variation - time (= market circumstances) variation against a published or at least well defined source. ETBE Ethyl Tertiary Butyl Ether. An hydrocarbon compound containing oxygen used as a component in reformulated gasoline. EUROPIA European Petroleum Industries' Association. EXPOSURE The extent to which a price change in the market affects your profit or loss. If a cargo is purchased for loading next week at a Platts related price, pricing at time of loading then PHYSICAL exposure exists since you are obligated to lift the cargo and must make physical arrangements to move the cargo. No financial exposure exists until after the cargo has loaded and priced. Price exposure exists after the price of the oil is known. If a cargo is purchased for loading next week at $16.00 per barrel then FINANCIAL exposure exists as soon as the deal is concluded. An understanding of this concept and the ability at any time to know with absolute certainty ones financial and physical exposure and the difference between the two is fundamental to successful trading. EX SHIP Ex Ship means that the Seller shall make the good available to the Buyer on board the ship at the port of discharge as named in the sales contract. The Seller has to bear the full cost and risk involved in bringing the good there. EX-WORKS The cost of goods when leaving the manufacturer's premises, without transport or other charges. FACULATIVE The right of option e.g. of an underwriter to decide whether or not to accept a risk. FARM IN Where one company acquires an interest in an exploration or production licence by paying some of the past or future costs of another company which is relinquishing part of its interest. FARM OUT Where a company relinquishes part of its interest in an exploration or production licence by paying some of the past or future costs of another company which is relinquishing part of its interest. FAS Free alongside ship i.e. including all charges up to delivery to the port, but excluding loading and freight costs. FBP Final Boiling Point. Upper limit of the distillation range. FEEDSTOCK Hydrocarbons which can be used as the basic material fed into a refinery or manufacturing process (primary or secondary unit). e.g.: - although the normal feedstock for a distiling unit is crude oil some residues (generally mixed with crude) can constitute a feedstock for distillers; - Vacuum Gas Oil and heavy distillate from a vacuum distillation constitute a feedstock for catalytic (or hydro) cracking unit; - Heavy naphtha is the normal feedstock of a catalytic reforming unit. FIP Free in Pipe. Type of contract in which the seller provides the oil for delivery into a pipeline and the buyer is responsible for the pipeline transport costs. FIRST FOOTS A BP term relating to samples taken from the first foot depth of product loaded into a vessel's tank. These are compared with samples taken before loading in order to check the cleanliness of the ship's pumps and lines. FLAKE A so-called offer normally brought to an oil company by an entrepreneur, middleman or influence pedlar with no previous experience or knowledge of the oil industry. The term flake (also called 'phantom') became common during the oil crisis in 1973/74. Flakes exist by persuading companies to issue a letter which they can then use as evidence that they are acting as a buyer on the company's behalf. The derivation of flake is 'snowflake' because they usually melt away. FLARING The burning off of gas produced in association with the production of crude oil, which for technical or economic reasons, cannot be re-injected or shipping ashore. FLASH POINT The lowest temperature at which vapours arising from the oil will ignite momentarily (i.e. Flash) on application of a flame under specific conditions. FLOATING ROOF A special tank roof which floats upon the oil. FOB 'Free on Board'. A contract in which the buyer provides the ship and the seller provides the cargo at port of loading. Includes charges up to and including loading on ship or plane, but excluding freight costs. FOB STOWED As FOB, but also including the costs of stowing goods in the ship's hold. FOR Free on rail i.e. including all charges up to delivery to the rail terminal, but excluding rail freight costs. FOT Free on truck i.e. including all charges up to and including loading of road tanker or truck. FR Federal Register. The US legislation register. FRACTIONAL DISTILLATION The process whereby crude oil or one of its components is split into liquids of different boil ranges (fractions) by distillation; the basic process that takes place in an oil refinery. FRACTIONING COLUMN The item of plant in which fractional distillation occurs. A CDU is primarily a series of fractioning columns. FREEZE POINT Temperature relating to the formation of hydrocarbon crystals. The point at which the temperature is read is product specific, e.g. for ATK it is the point at which hydrocarbon crystals inhibit the clarity of the product. FREIGHT RANGE The charge for transporting goods. FREIGHT RATE The charge for transporting goods. FSU Former Soviet Union. FUEL OIL The heavy distillates and residues from the oil refining process, distiling between light lubricating oil and kerosene. Uses include diesel fuel and central heating systems. FUNDAMENTALS Pertinent supply and demand factors which are expected to influence specific price behaviour of commodities, especially in the longer term. FUTURES Standardised contract for the purchase or sale of a commodity which is traded for future delivery under the provision of exchange regulations. GAS OIL The middle distillates, having viscosities and distillation range intermediate between those of kerosine and light lubricating oil. Suitable gas oils are also used as fuels for high speed diesel engines (automotive). GASOLINE A refined petroleum distillate, normally boiling within the limits of 30-200°C and suitable for use as a fuel in spark-ignited internal-combustion engines. It is the normal terms used in the USA to denote motor spirit (motor gasoline, mogas or just 'gas'). In the UK 'gasoline' normally denotes a petroleum spirit of distillation range 30-100°C. It is also known as petrol or motor spirit. GP 'General Purpose' ship of between 16,500 and 25,000 tons deadweight; normally used to carry products. GPW 'Gross Product Worth'. A measure of the composite monetary value of the products obtained from a given refining condition. GRAVITY A common abbreviation usually meaning specific gravity in the UK and API gravity in the USA. GROSS REGISTERED TONNAGE The volume of the interior of a crude tanker, including all of the spaces which are permanently closed in (but excluding the double bottom), expressed in tonnes per 100 cubic feet. GROSS TONNAGE The volume of the interior of a crude tanker including all spaces which are permanently closed in (but excluding the double bottom), expressed in tons per 100 cubic feet. GSP Government Selling Price as announced by the producing government (or government company). This does not necessarily meant that all the governments sales will be made at this price. GVW Gross Vehicle Weight. HEAVY CRUDE Crude oil with a high specific gravity and low API gravity due to the presence of a high proportion of heavy hydrocarbon fractions. HEAVY FRACTIONS or HEAVY ENDS The high-molecular weight, high-boiling point of fractions that emerge from the lower part of a fractionating column during the oil refining process. HDS Hydrodesulphurisation - see HYDROFINING HEDGE To protect a physical position against an adverse price movement. e.g. A physical position (eg. 1 crude cargo long, ie. bought but not yet sold) is offset by an equal and opposite futures position (eg. 1 crude cargo short on the futures market). Thus a company with product in stock or a refinery with planned production may sell futures to protect against a fall in prices while a company with a future oil requirement may buy futures to protect against a rise in prices. HYDROCARBONS Materials composed entirely of carbon and hydrogen. The carbon atoms may be in linear or ring formations. HYDROCRACKING A catalytic process combining cracking with hydrogenation. Often called Isocracking in the USA. Feedstocks are generally Vacuum Gas Oil and the products depend on the severity of the operation. In the USA the units principally produce naphtha for reformer feedstock, whereas in Europe and the Far East the operation is directed towards making kero and diesel fuel. HYDRODESULPHURISATION A desulphurisation process in which the oil is heated with hydrogen. Usual abbreviation is HDS. HYDROFINING A fixed-bed catalytic process to desulphurise and hydrogenate a wide range of feed stocks from gases to waxes. Normally used in a refinery to desulphurise middle distillates. IBP Initial Boiling Point. The temperature at which the first drop of distillate falls from the condenser during a laboratory distillation test. IMO International Maritime Organisation. INDEPENDENT INSPECTOR Third party appointed to oversee either the loading or discharge of a cargo. INDICATION There are three distinct phases in a negotiating dialogue:- - INDICATION - OFFER/BID - ACCEPTANCE An Indication is a verbal or written advice by a prospective seller to a customer that he may have goods or commodities for sale in approximate terms. Also applies for a prospective buyer. An Offer is a notification by the offerer (seller) that he is willing to do business on particular terms and that the notification be turned into a binding agreement through acceptance by the offeree (buyer). A Bid is a notification by the buyer that he is willing to do business on particular terms and that the notification be turned into a binding agreement through acceptance by the seller. Nothing short of an unequivocal acceptance turns an offer into a binding agreement. Acceptance of an offer or bid finally closes the transaction and is thus legally binding on both parties. However, it should be emphasized that a 'counter-offer' is, in practice, a rejection of the formal offer and the offering party is therefore quite entitled to withdraw from the dialogue if he wishes. It is also important to remember that when accepting an offer subject to certain terms being finalized, that this is not a complete acceptance, and therefore the whole deal is not legally binding. INHIBITOR A substance the addition of which in small amounts in a petroleum product prevents or retards undesirable changes taking place in the quality of the product, or in the condition of the equipment in which the product is used. In general, the essential function of inhibitors is to prevent or retard oxidation. Examples of uses include the delaying of gum formation in stored gasolines and of colour change in lubricating oils; the prevention of corrosion is also included, e.g. rust prevention by inhibitors in turbine oils. IP 'Institute of Petroleum'. The official British organisation which deals with petroleum technology and the standardisation of test methods for petroleum. IPE 'International Petroleum Exchange'. The governing body for the London petroleum futures markets. IPECA International Petroleum Industry Environmental Conservation Association. ISO International Standards Organisation ISOMER A compound having the same chemical composition and molecular weight as another but possessing a different molecular structure. The term is frequently used to differentiate branch-chain from straight-chain hydrocarbons. JET Jet fuel (used by Airlines). JET AL see ATK KEROSINE A refined petroleum distillate intermediate in volatility between gasoline and gas oil. Its distillation range generally falls within the limits of 150°C and 260°C. Its main uses are as an illuminant, for heating purposes, and as a fuel for certain types of internal-combustion engines and for the manufacture of aircraft fuel. In the UK commonly but correctly termed 'paraffin' or 'paraffin oil'; the spelling 'kerosene' is now officially obsolete. KNOCK The noise associated with pre-ignition of a portion of the fuel-air mixture in the engine cylinder of spark ignition engines, ahead of the flame front. LANDED PRICE The actual cost of oil to a refiner, taking into account all costs from the place of production or purchase to the refinery. LAYCAN The period for which the charter agree to provide the vessel at load port. Failure to do so gives charterer the right to cancel charter or re-negotiate terms. LAY DAYS The period set out in the Charter Party during which the vessel should be present and ready to load. Failure to meet this condition allows the shipper an option to cancel the Charter Party. LAY TIME The time permitted under Charter Party terms for loading or unloading. Exceeding the time permitted renders the shipper liable to demurrage penalties to the ship owner. Conversely, if loading or unloading takes less time, the shipper can claim despatch money (usually half the demurrage rate) from the ship owner. Both rates should be specified in the Charter Party and would normally be settled after delivery, since one might offset the other. LDF Light distillate feedstock. A light fraction, typically 15-95 °C. A product of the distillate hydrotreater. Used as a petrochemical feedstock, see naphtha, and a motor gasoline blend stock. LEAD RESPONSE The increase in octane number of a motor or aviation spirit due to the addition of TEL or TML. LIGHT CYCLE OIL Middle distillate fraction from the FCCU which blends into gas oils, possibly after hydrotreatment, or into fuel oil. LIGHT CRUDE Crude oil with a low specific gravity and high API gravity due to the presence of a high proportion of light hydrocarbon fractions. LIGHT DISTILLATE (LD) A term lacking precise meaning, but commonly applied to distillates the final boiling point of which does not exceed about 300 °C. LIGHT FRACTIONS The low-molelcular weight, low-boiling point fraction that emerge from the upper part of a fractionaling column during the oil refining process. LIGHT HYDROCRACKATE Light distillate from the HCU often of low octane which blends to gasoline. LINEAR PROGRAMME Computer based mathematical model used for solving complex problems by reducing them to a series of linear equations. LIQUIDITY A market is said to be 'liquid' when it has a high level of trading activity, allowing buying and selling of commodities with minimum price disturbance. LNG 'Liquefied Natural Gas'. Oilfield or naturally occurring gas, chiefly methane, liquefied for transport purposes. LOCAL An exchange member who executes order for futures trades for his own account. LONG The market position of a person who has bought a commodity and not yet sold it. Unless he sells it he will have to accept delivery at some time in the future; also, the holder of a long position in the market. LOSS OF SPECIE Any change in the nature of goods insured sufficient for it to be said that they are no longer the same goods. LOT Any definite quantity of a futures commodity of uniform grade: the standard unit of trading. In Crude 1 lot =1000 bbls. In Gasoil in NEW 1 lot = 100 tonnes LPG 'Liquefied Petroleum Gas'. Light hydrocarbon material, gaseous at atmospheric temperature and pressure, held in the liquid state by pressure to facilitate storage, transport and handling. Commercial liquefied gas consists essentially of either propane or butane, or mixtures thereof. LR1 'Long Range' ocean going vessel of 45,000 to 80,000 tonnes deadweight. LR2 'Long Range' ocean going vessel of 80,000 to 160,000 tonnes deadweight. LUMP SUM FREIGHT A fixed freight rate, regardless of cargo quantity. MARGIN Value added by a refinery in turning crude or feedstock into products. Or... Money paid to the exchange during the trading life of an open futures contract to guarantee fulfilment of contract obligations. Or... The profitable difference between the price of buying and selling the same commodity. MARGIN CALL A demand for additional margin funds when futures prices move adverse to a trader's position. MARKER CRUDES Benchmark grade crudes are the crudes off which other crudes price in their area. For example crudes produced in the North Sea or destined for European refineries are priced off Brent and are invariably quoted at a premium or discount to Brent. Similarly WTI (West Texas Intermediate) is the benchmark crude for the USA and Latin America. Dubai crude is used for Arabian Gulf crudes which are destined for the East. MERC see NYMEX MIDDLE DISTILLATE (MD) A term covering distillates boiling in the range 20 °C - 350 °C. Includes kerosine and gas oil. MOGAS see GASOLINE MOTOR SPIRIT Used to indicate fuel for spark-ignited internal combustion engines, having an approximate distillation range of 30 °C - 200 °C. Equivalent terms are gasoline, 'petrol' and 'motor fuel'. MR 'Medium Range' vessel of 25,000 to 45,000 tonnes deadweight. MTBE Methyl Tertiary Butyl Ether. An hydrocarbon compound containing oxygen used as a component in reformulated gasoline. NAPHTHA A range of distillates covering the heavier end of gaseous fuel and the lighter end of the kerosine range. The term Naphtha is also used as an alternative to LDG. NATURAL GAS A mixture of light hydrocarbons (generally the major component is methane) found naturally in the earth's crust, often in association with crude oil, when it is known as associated gas. Natural gas is classified as wet or dry depending on whether the proportions of gasoline constituents which it contains are large or small. NBV Net Book Value. NETBACK The value of a crude to a refiner at its source of supply. It is calculated by deducting the costs of refining (variable), freight, working capital, insurance, losses and any other relevant allowances from the GPW. NETBACK CRUDE Crude purchased on a pricing basis that is refined worth. In theory this will guarantee the refiner a positive margin when processing the crude. NET POSITION A position not offset be a countervailing position; ie. the opposite of a spread. NET REGISTERED TONNAGE The gross tonnage of a crude or tanker, less the machinery, boiler and bunkers, crew and stores spaces. See GROSS TONNAGE NET TONNAGE see TONNAGE NGL 'Natural Gas Liquids'. Liquid hydrocarbon found in association with natural gas. NIR ANALYSER An analysis system based on Near Infra red technology. On a refinery many of these systems are computer controlled and often used to asses blend quality. NIR analysers can be used "in-line" and are used for monitoring product quality in real time, ie as the process is operating, as there is no need to take samples for laboratory analysis. NON VOLATILE see VOLATILE NOX Nitrogen Oxides. A set of pollutant gases associated with the combustion of hydrocarbons, particularly at high temperatures. Oxides of nitrogen take part in the sequence of reactions leading to the formation of photochemical smog. NOR Notice of Readiness. The date and time a ship presents when ready in all respects to load or discharge cargo. NYMEX New York Mercantile Exchange. The governing body for a number of American futures markets, including oil. The 'Merc'. OCIMF Oil Companies International Marine Forum. OCTANE NUMBER The octane number of a gasoline is a measure of the resistance of a fuel to pre-ignition (knock) when burned in an internal combustion engine. The higher the octane number, the higher the anti-knock quality of the gasoline. This quality is determined in a standard engine by matching for detonation the gasoline under test against a mixture of iso-octane and normal-heptane, both pure hydrocarbons, the percentage by volume of iso-octane in that mixture being noted as the octane number. OFFSHORE The adjective applied to any structure or activity located or carried out at sea as opposed to on land. OIL SHALE A rock of sedimentary origin, with an ash content of more than 33 per cent; the contained organic matter yields oil when destructively distilled, but not appreciably when extracted with the ordinary solvents for petroleum. OLEFINS Olefins (Alkenes). A series of aliphatic hydrocarbons containing a double bond which are more reactive than paraffins. The lowest members are ethylene, propylene and butylene. ON-STREAM Term signifying that the processing plant, refinery or pumping station are operating. ONSHORE The adjective applied to any structure or activity located or carried out on land as opposed to at sea. OPA Oil Pipeline Agency. The successor BNOC whose primary function is to handle to UK governments royalty oil. OPEC Organisation of Petroleum Exporting Countries. OPEN POSITION The number of contracts in existence at any period of time which have not as yet been satisfied by an offsetting sale or purchase or by actual delivery. O/T QUANTITY Out turn quantity. The quantity of oil received at the discharge port as measured by onshore tank dips, hence, O/T Loss which is the difference between the Bill of Lading quantify and the O/T quantity. There is always a degree of voyage loss due to evaporation. O/T LOSS The difference between the B/L quantity and the O/T quantity. There is always a degree of voyage loss due to evaporation. OPTIONS An option gives the taker (buyer) the right, in return for payment of (insurance) premium to be long or short in a specified futures month up to a started date (the declaration date) at a fixed price (the strike price). If the buyer chooses not to exercise his option it is abandoned. He has paid the premium and the seller has received it. It is not returned. Click on the following links to view the Risk Management   Cap,   Collar,   Participation and   Swap tutorials OVERHEADS Light fraction, typically < 240oC, from the CDU which is further processed in the Distillate Hydrotreater. OXYGENATES Molecules which contain carbon, hydrogen and oxygen such as MTBE or ETBE. They are used in reformulated gasoline to enhance combustion and reduce the production of pollutant gases such as CO during combustion. PAPER A contract to buy/sell oil which usually results in a cash settlement rather than real oil changing hands. PAPER MARKET A non regulated market, e.g. the Brent market, where no official exchange exists. Deals only effectively become "paper deals" when they are booked out, although they are often viewed as such from the start if the intention is always to book out. PARAFFINS (Alkanes) A series of saturated aliphatic hydrocarbons the lowest members of which are methane, ethane and propane. The higher homol-logues are solid waxes. PARTICIPATION see OPTIONS Click here to view the Risk Management Participation tutorial. PETROL see MOTOR SPIRIT or GASOLINE PETROLEUM ETHER A Special Boiling-Point Spirit of high volatility and narrow distillation range. e.g. 40-60°C or 60-80°C, used in the extraction of edible oils, etc., and for laboratory analytical work. PFD Primary Flash Distillate. The total distillate from the primary column. This is subsequently separated into gas and gasoline, the latter being blended into motor spirit. PHANTOM OFFER see FLAKE PHYSICAL Real oil. PIA Petroleum Industries Association. PITCH This is a generic term covering materials obtained as residues from the distillation of coal tar. It should not be used to describe petroleum products. PLATFORMING A refinery process using a platinum containing catalyst. See REFORMING PLATTS A long established publication containing news, market information and oil prices. Platts prices are often used as an independent source in the pricing mechanism for oil deals. POLYMERISATION The combination of small molecules (monomers) to form large molecules (polymers or macromolecules). Plastics, rubbers and fibres are composed of polymers, examples being polystyrene, polyisoprene and polyacrylonitrile. POSITION Taking a position is to close a firm contract to buy crude oil or products, or to secure capacity such as refining or shipping. By definition, to take a position implies a forward commitment where the buyer accepts all the risks without regard to the possible upward or downward development of the market during the period that the business is being discharged. When a trader takes a position it normally suggests that he has acquired title to product, probably on a speculative basis, without a fixed outlet, in the hope that the market will rise and he will make a profit. POSTINGS or POSTED PRICE Originally, the reference prices on which producing companies made royalty and taxation payments to host governments for crude supplies in concession areas. The term is also used in the US to denote the price which refiners are prepared to pay for domestic crude supplies. Postings also represent the price applicable to medium and long term sales, which have traditionally been pitched to enable a refiner to recover the term costs of crude freight and refining. Product postings are set by refineries at Singapore, the Arabian Gulf and the Caribbean, and are used as the basis for inland pricing in a number of countries. In general posted prices are becoming increasingly spot related. POUR POINT The pour point of an oil is defined as 3°C above that temperature at which the oil just fails to flow when cooled under prescribed conditions. Pour point is often used in conjunction with Cloud Point as both measures relate to the handling and storage of oils under cold weather conditions. PPEFA Product Property Evaluation From Assay. BP's short cut distillation simulation programme. PPM Parts per million. This can be quoted in volume or mass terms. PROCESSING DEAL A trader effectively "rents" refining capacity from a refiner by paying a fee, delivering crude oil and taking products according to a pre-specified yield. PUT see OPTIONS QUALITY GIVEAWAY The selling price of any given product will reflect quality characteristics e.g. a low sulphur fuel will command a higher selling price than a high sulphur fuel oil. Quality 'give away' occurs when a supplier is forced or chooses to provide, a customer with a product that is of a higher specification than is actually required. RAV Realisable Asset Value RCOP Replacement Cost Operating Profit. Meant to be the P&L relating to all operations of a business based on replacement costs not historic actual costs of goods, including non-cash costs (depreciation, disposal profit/loss etc.); in BP terms this is normally quoted before tax and exceptional items. REFERENCE DENSITY Marker density to which market prices relate. REFERENCE FUEL A standard fuel with which other fuels can be compared in measuring such things as octane number. REFORMING A process in which straight-run feed stocks e.g. SRB, are subjected to high temperature and pressure in the presence of a catalyst with the object of charging the chemical structure in such a way as to increase their octane number. REFORMULATED GASOLINE A motor gasoline designed to reduce the pollutants emitted by motor vehicles. Reformulated gasoline (RFG) differs from conventional gasoline by the reduction of aromatics (particularly benzene) and the inclusion of oxygenates. Most important in the US where the Clean air act requires that RFG be the only gasoline in areas which do not meet pollution limits. RFG is expected to represent a third of the US gasoline market. To meet RFG product quality standards, refiners have added processing steps and blending components. REID VAPOUR PRESSURE - RVP The vapour pressure of petroleum products, e.g. gasoline measured at 100°F in the Reid apparatus and reported in pounds per square inch. This is used as an indication of the volatility of a liquid. RE-RUN BOTTOMS Middle distillate draw from the Grangemouth FCCU. Blends to gas oil and fuel oil. RESIDUAL FUEL OIL The very heavy fuel oils produced from the residues from the refining processes. They have high viscosities and are often cut back using higher boiling point, lower viscosity oils. RESIDUE The non-volatile components of crude oil which flow out of the bottom of a fractioning column during fractional distillation. RING FENCE A fiscal procedure whereby taxable profits from oil or gas production cannot be offset against other losses made by the company involved. ROA Return on Assets. ROACE Return on Average Capital Employed. ROI Return on Investment. ROTTERDAM MARKET Historically, the Rotterdam Market grew out of the complex of oil industry facilities (storage and refineries) which developed in the Dutch port of Rotterdam. By far the greater volume of products handled through Rotterdam was for inland wholesalers and distributors, who wished to buy job lots of oil to put into their own small outlets. Most of this business was moved by barge. As is the case with any market, a business infrastructure - comprising of traders, brokers, price quotations etc. soon developed and this became known as the 'RotterdamMarket'. It should be emphasised that most of the activity was in products trading and very little crude was or still is traded actually in the port of Rotterdam.By the mid 1980's, because of changes in the pattern of the international oil business, many of the small trading companies who had first established business in Rotterdam moved their offices away from the City, mostly to London or Switzerland. London offered far better communications with other parts of the world than Rotterdam. London is also a major money and marine market and the location of a number of major Company offices. Switzerland was chosen by some small traders as a tax haven. However, one should not be misled by the term 'Rotterdam Market'. Trading activity in the port of Rotterdam today is mostly confined either to barges or to the transfer of oil in tank. The reason the term 'Rotterdam Market' is still used is a hang-over from the previous system where prices were quoted at Rotterdam. The Rotterdam quotation is essentially a guide to prices in North West Europe. It is perfectly possible to operate in the so called Rotterdam market from an office in Tokyo, if you have good telex and telephone communication facilities. ROUNDTURN The completion of both a purchase and sale of a commodity futures contract. ROUND VOYAGE A Voyage that goes from load port to discharge port and back to load port. ROYALTY A share in the production or revenue reserved by the grantor of an oil lease or licence. RVP Reid Vapour Pressure. The pressure exerted by vapour escaping from the liquid petroleum products e.g. motor spirit, measured 100F in the Reid apparatus. SBM 'Single Buoy Mooring' see ELSBM SBS see Special Boiling-Point Spirit SFA Securities and Futures Authority. SHALE OIL The distillate obtained when oil shale is heated in retorts. SHIPS ARTICLES The agreement between a vessel's master and his crew, giving details of conditions and terms. SHORT The market position of a futures contract seller whose sale obligates him to deliver the commodity unless he liquidates his contract by an offsetting purchase; also, the holder of a short position in a market. SHUTTLE TANKER An oil tanker which makes regular round trips between a producing field and terminal, or refinery. SIMEX Singapore Monetary exchange. SLIPPAGE When a vessel is delayed, normally to outside an agreed Date Range. SLUDGE Acid Sludge. Materials of high specific gravity formed during the chemical refining treatment of oils by sulphuric acid, and usually separable by settling or centrifuging. Also known as Acid Tar. Engine Sludge. The insoluble degradation product of lubricating oils and/or fuels, formed during their use in internal-combustion engines and deposited from the oil on to engine parts outside the combustion space. Water may or may not be present in such material. Tank Sludge. Materials which collect at the bottom of storage tanks containing crude oils, residues, or other petroleum products.  Such sludge usually contains water. See BS&W SOUR Description that indicates a high sulphur content. SOUR CRUDE Crude oil with a high sulphur content. SOUR GAS Hydrocarbon gas containing undesirable sulphur compounds, hydrogen sulphide and methyl mercaptan. SOx Oxides of sulphur. A set of pollutant gases produced when fuels containing sulphur are burned. Increasingly legislation is being introduced to limit the amount of sulphur permitted in fuels, particularly gas oils and fuel oils for inland use. SPECIAL BOILING-POINT SPIRIT - SBS. A petroleum solvent fractionally distilled to specially selected distillation characteristics. Such distillates are normally manufactured from well-refined straight-run naphthas. The various volatilities are designed to enable a suitable grade to be chosen for any particular industrial purpose. SPECIFIC GRAVITY - SG The specific gravity of a liquid fuel is the ratio of the weight of a given volume of the fuel at a stated temperature to the weight of an equal volume of water, also at a stated temperature. It is usual to quote specific gravities at either 15°C or 60°F. SPECULATOR An individual who invests rather than hedges in commodity futures with the objective of achieving profits by successfully anticipating price movements. SPM Single point mooring. See ELSBM SPOT Term which describes a one-off open market cash transaction, where a commodity is purchased 'on the spot' at current market rates. Spot transaction contrast to term deals, which specify a steady supply of product over a period of time. Also 'spot month' refers to the nearest futures delivery month. SPOT PRICES A term which describes a one-off open market cash transaction, where a commodity is purchased 'on the spot' at current market rates. Spot transactions contrast to term sales, which specify a steady supply of product over a period of time. SPREAD The simultaneous purchase of one futures contract and sale of a different futures contract. Also refers to a futures contract purchase in one market and a simultaneous sale of the same commodity in some other market. May also refer to a futures contract purchase in one month and the sale of the identical contract in another month. SPUR A floating on-field storage tank into which oil flows from a production platform prior to being transferred to a tanker for shipping shore. SRB Sulphate Reducing Bacteria. Presence of these bacteria can cause crude oils and petroleum products to sour. SRB's are bacteria which feed on the sulphur compounds found in petroleum and petroleum products. The sulphates are converted to Hydrogen Sulphide which is a sour. gas. Hydrogen sulphide when present with water, i.e. tank bottoms, will form sulphuric acid, leading to potential corrosion problems. If a bacterial problem is detected the tanks must be treated with a suitable biocide. SRG Straight Run Gasoline. Used in motor spirit blends and as LDF. STRAIGHT RUN Fractions produced directly from crude oil by distillation but not subsequently heated cracked or reformed.Refers to a petroleum product produced by the primary distillation of crude oil; the simple vaporization and condensation of a petroleum fraction, without the subsequent use of temperature, pressure, solvents, additives or catalysts. STRAIGHT RUN BENZINE Used as a platformer feedstock or naphtha. STRAIGHT RUN GASOLINE Used in motor spirit blends and as naphtha. SWAP A fixed price paper contract for a specific time period, quantity and grade. Click here to view the Risk Management Swap tutorial. SWEET CRUDE Crude oil with a low sulphur content. SWEETENING Any treatment which renders a sour product sweet, for example, hydro treatment, amine adsorption and merox treating. TAKE OR PAY A long term contract between a natural gas. producer and purchaser (a pipeline transmission company, for example). The buyer agrees to purchase, or take a minimum amount of gas from the producer, and has to pay the producer for the minimal amount even if the gas is not taken. TANK TOPS An expressed used to describe when a storage tank is full. TECHNICAL TRADING Acting upon the analysis of patterns of futures price change, rates of change, and change in trading volume in order to predict and profit from such trends. Often analysed by charting/graphs. TEL Tetra Ethyl Lead. A colourless stable liquid obtained commercially by the action of lead-sodium alloy on ethyl chloride. When added in small proportions to motor spirit it increases the octane number. For this purpose, tetra ethyl lead is used in the form of ethyl fluid. TERMINAL An onshore installation designed to receive oil and/or gas from a pipeline or from tankers; it is not a refinery. TERM PRICE Price applying in an ongoing contract involving the sale of several cargoes over a specific time period. THERMAL CRACKING The process whereby heavy hydrocarbon molecules are broken down (cracked) in to lighter molecules by raising them to a high temperature. Visbreaking is a thermal cracking process. THROUGHPUT A term used to describe the total amount of raw materials that are processed by a plant such as an oil refinery in a given period. TIGHT A shortage of a commodity (normally physical availability) which tends to drive the price up. TIME CHARTER The charter has the use of the vessel for a specific period. The ship owner supplies the crew and provisions. TITLE To have title to oil is to have ownership fully supported by a legally documented and agreed terms of purchase and sale. TML Tetra Methyl Lead. A lower boiling analogue of TEL used to improve the front-end octane number of motor spirit. TON Normally a long ton weighting 2240 pounds. TONNAGE (SHIPS) By international agreement, Merchant vessels are measured in tons of 100 cu.ft., the resultant tonnage being termed Gross Tonnage. Deductions are made from this figure in respect of engine-room and bunker spaces, accommodation, etc. to arrive at the Net Register Tonnage. In the commercial employment of Merchant vessels, particularly tankers, the tonnage figure usually referred to is the Deadweight Tonnage. This figure represents the total carrying capacity of the ship in tons of 2,240 lb. when loaded to summer marks, viz. when loaded to the appropriate freeboard during the summer season. To arrive at the weight of cargo carried, it is necessary to deduct bunkers, stores, water, etc. While there is not necessarily any relationship between the Deadweight Tonnage and the Gross or Net Tonnage - in the case of tankers the approximate summer deadweight figure may be taken as two and half times the Net Register Tonnage. Conversely the Gross Tonnage may be taken as approximately two-thirds of the Deadweight Tonnage. TONNE A metric tonne weighing 1000 kilograms. TOPPED CRUDE Crude oil from which some of the lighter constituents have been removed by distillation. TOPPING UNIT Alternative name for CDU. TRANSHIPMENT The transfer of oil from tanker to one or more other tankers at the same port. TREATMENTS Somewhat loosely used to cover all those refining operations where small proportions of undesirable constituents are removed from products by chemical or physical means, e.g. acid treatment and sweetening. TREND The general direction of a price movement. ULCC 'Ultra-Large Crude Carrier'. An extremely large ocean-going tanker of over 320,000 tonnes deadweight. ULLAGE Technically, ullage is the space, filled by air or vapour, above the surface of liquid in a closed container (tank). It is estimated by measuring the distance from the top of the container to the surface of the liquid. The amount (normally expressed in tonnes or m) of usable tankage space, either short or ships tanks, available at a given time to receive more oil. UPGRADING UNIT A process plant that cracks or upgrades residues or heavy distillates into lighter more valuable products. Catalytic Cracking and Visbreaking are two common examples of upgrading units. UPLIFT The total quantity of fuel supplied to an aircraft at one refuelling. VACUUM RESIDUE The residues or bottoms from a VDU. VAPOUR PRESSURE The pressure exerted by the vapour escaping from a liquid. As the temperature of the liquid rises, its vapour pressure increases; eventually it exceeds the pressure of the confining atmosphere and the liquid boils. In the petroleum industry vapour pressures are usually reported as Reid Vapour Pressure. VDU Vacuum Distillation Unit. A fractional distillation unit operating at reduced pressure. Used to further distil atmospheric residue (AR) into Vacuum Gas Oil, waxy distillate and vacuum residue. Vacuum distillation units are also used in the manufacture of lubricating oils, however the distillation ranges of fractions are different from fractions to be used in fuels production. VETTING A BP procedure to determine the acceptability of vessels for use in BP operations, the object being to minimise risk of spillage, damage, accidents, etc. VGO 'Vacuum Gas Oil'. Produced from a vacuum distillation unit. VISBREAKER A unit in which the viscosity of a straight run residue is reduced by mild thermal cracking. VISBREAKING viscosity breaking; lowering or 'breaking' the viscosity of residue by cracking at relatively low temperatures. The process converts the large molecules of heavy residue into the smaller molecules of lower viscosity liquids. VISCOSITY A measure of the resistance that a fluid makes to motion or flow; it usually decreases as the temperature rises. VISCOSITY INDEX A number used to characterise the rate at which the viscosity of a lubricating oil changes with changing temperature. VLCC 'Very Large Crude Carrier'. A large ocean-going tanker of 160,000 to 320,000 tonnes deadweight. VOC Volatile Organic Compounds VOLATILE A market is said to be volatile when significant price movements occur suddenly and unexpectedly. Such movements are normally a reflection of short term sentiment rather than longer term fundamentals. VOLATILITY The ease with which a produce begins to vaporise. Volatile substances have relatively high vapour pressures and therefore boil at relatively low temperatures.When a complex mixture is heated, the high vapour pressure, volatile substances will boil or evaporate off leaving the non-volatile components behind. VOYAGE CHARTER The shipowner hires out his vessel for the carriage of cargo for a single voyage. WAXY DISTILLATE (WD) Cracker feedstock normally produced from the distillation of atmospheric residue in a VDU WEATHERED CRUDE Crude oil which has lost an appreciable quantity of its volatile components owing to natural causes storage and handling. WEATHERING A term applied to the loss of light petroleum fractions by exposure of the oil containing them to the atmosphere. Hence Weathered Crude is a crude oil which has lost an appreciable quantity of its volatile components owing to natural causes during storage and handling. WET BARREL An actual barrel of product, as opposed to a paper barrel which appears only as a credit in an accountant's ledger. WET GAS A gas mixture containing easily liquefiable components. WHITE CARGO see CLEAN CARGO WHITE OILS A term applied to oils substantially colourless and without bloom made from light lubricating oils by a drastic process of refining. They have various uses, such as for medicinal purposes and in the manufacture of toilet preparations. The term is also used in the expression of 'White Oil Ships', in which case, light-coloured petroleum products up to gas oil are meant. WHITE PRODUCT SHIPS Ships which carry only white products as cargo, these are light coloured petroleum products increasing in boiling range up to gas oil. WHITE PRODUCTS A term applied to the lighter petroleum products that are in general nearly colourless. see CLEAN CARGO WHITE SPIRIT A refined distillate intermediate in distillation range between gasoline and kerosine. (i.e. with a distillation range of about 150-200°C). It is used as a paint thinner and for dry cleaning, etc. The term 'mineral turpentine' or 'turpentine substitute' is sometimes used for white spirit, but is not recommended, owing to possible confusion with gum turpentine. In the USA the term 'petroleum spirits' is used for white spirit. WORLDSCALE System used to price shipping voyages throughout the world. It consists of a Worldscale Schedule on a Worldscale Rate. WORLDSCALE RATE The percentage which when used in conjunction with the Worldscale schedule defines the true freight rate for a voyage. The real cost of a voyage quoted at WS50 will be 50 percent of the cost quoted in the worldscale schedule. WORLDSCALE SCHEDULE Based on a standard sized vessel, the cost of a round trip e.g. Rotterdam - Le Harve - Rotterdam, which includes all expenses incurred on the voyage, such as port costs, bunker etc. WTI Crude oil from West Texas - the US marker grade. XYLENE Colourless liquid,  C6H4(CH3)2, of the aromatic group of hydrocarbons made by the catalytic reforming of certain naphthenic petroleum fractions. Used as high-octane motor and aviation spirit blending agents, solvents, and chemical intermediates.   Isomers are meta-xylene, ortho-xylene and para-xylene. YIELD The quantity of product from a process.