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Custody Transfer in the oil and gas industry refers to the transactions involving transporting physical substance from one operator to another. This includes the transferring of raw and refined petroleum between tanks and tankers; tankers and ships and other transactions. Custody transfer in fluid measurement is defined as a metering point (location) where the fluid is being measured for sale from one party to another. During custody transfer, accuracy is of great importance to both the company delivering the material and the eventual recipient, when transferring a material.
The term "fiscal metering" is often interchanged with custody transfer, and refers to metering that is a point of a commercial transaction such as when a change in ownership takes place. Custody transfer takes place any time fluids are passed from the possession of one party to another.
Custody transfer generally involves: Industry standards; National metrology standards; Contractual agreements between custody transfer parties; and Government regulation and taxation.
Due to the high level of accuracy required during custody transfer applications, the flowmeters which are used to perform this are subject to approval by an organization such as the American Petroleum Institute (API). Custody transfer operations can occur at a number of points along the way; these may include operations, transactions or transferring of oil from an oil production platform to a ship, barge, railcar, truck and also to the final destination point, such as a refinery.