An Unconditional Dip Test Authorization (UDTA) letter is a critical document in oil trading, granting a buyer or their representative (e.g., an inspection agency like SGS) permission to conduct a dip test to verify the quality and quantity of oil in a seller’s storage tank without preconditions such as payment or additional approvals. Below are the key instructions and elements that should be included in a UDTA letter, based on standard practices in the oil and gas industry:

Instructions to Include in a UDTA Letter

  • Letterhead:
    • The UDTA should be on the seller’s or tank leaseholder’s official letterhead, including the company’s name, logo, address, and contact details.
  • Tank Leaseholder Details:
    • Clearly state the name and details of the tank leaseholder or titleholder of the product, confirming their authority over the tanks and the product.
  • Recipient Information:
    • Address the letter to the buyer or their designated representative (e.g., SGS or another inspection agency). Include the buyer’s corporate details, such as company name and address.
  • Subject Line:
    • Include a clear subject line, such as “Unconditional Dip Test Authorization Letter” or “Authorization for Dip Test on Storage Tanks.”
  • Tank and Product Details:
    • Specify the tank reference code numbers, location (e.g., Rotterdam, Houston), and product details (e.g., type of oil, such as EN590 or JP54).
    • Include relevant documentation references, such as tank storage receipts (TSR) or product passport details, if applicable.
  • Authorization Statement:
    • Explicitly state that the tank leaseholder grants unconditional permission to the buyer or their representative to conduct a dip test on the specified tanks. The term “unconditional” should be emphasized to indicate no preconditions (e.g., payment or additional approvals) are required for the test.
    • Example: “We, [Tank Leaseholder], the official leaseholder of the tanks with reference code number(s) [Tank Numbers], hereby grant unconditional permission to [Buyer’s Name] and/or their respective assigns or inspectors to conduct a dip test on each tank.”
  • Scope of the Dip Test:
    • Outline the purpose of the dip test, which is to verify the quality and quantity (Q&Q) of the product in the tanks.
    • Mention that the test will be conducted by a reputable inspection agency (e.g., SGS) using standardized methods (e.g., manual dipping or automated sampling).
  • Tank Farm Cooperation:
    • Request that the tank farm control tower or terminal operator cooperate fully with the buyer’s representatives to ensure prompt completion of the dip test.
    • Example: “The Tank Farm Control Tower is hereby requested to extend full cooperation to [Buyer’s Name or Inspection Agency] to complete the test in a prompt manner.”
  • Effective Date and Duration:
    • Specify the effective date of the authorization and its validity period (e.g., “This permission is effective immediately and lasts until [Date].”).
    • Ensure the duration aligns with the agreed timeline for the dip test.
  • Supporting Documents:
    • Note that a copy of the UDTA has been provided to the tank farm control tower or terminal operator for reference.
    • Optionally, mention accompanying documents, such as a fresh SGS report, tank storage receipt (TSR), or authorization to verify (ATV), if applicable.
  • Signatures and Notarization:
    • The letter should be signed by an authorized representative of the tank leaseholder or seller.
    • Include the signatory’s name, title, and contact information.
    • Depending on the transaction requirements, the letter may need to be notarized to confirm its authenticity.
  • Additional Notes (Optional):
    • Clarify that the dip test is at the buyer’s expense, if applicable.
    • Mention compliance with terminal or port regulations (e.g., Rotterdam’s post-2018 rules requiring a Tank Storage Agreement in some cases).
    • Quotation from appointed Inspection agecy
      Buyer must collect a quotation letter from the inspection agency which will conduct the DIP test.

SAMPLE  OF UDTA LETTER

[Seller/Tank Leaseholder Letterhead] [Date]

To: [Buyer’s Company Name] [Buyer’s Address]

Subject: Unconditional Dip Test Authorization Letter

Dear [Buyer’s Name or Inspection Agency],

We, [Tank Leaseholder/Seller Name], the official leaseholder of the tanks and titleholder of the product with the following reference code number(s): [Tank Numbers], located at [Tank Farm Location, e.g., Vopak Horyzon Terminal/] Fujairah, hereby grant unconditional permission to [Buyer’s Name] and/or their designated representatives, including [Inspection Agency, e.g., SGS], to conduct a dip test to verify the quality and quantity of [Product Type, e.g., EN590 Diesel] in the specified tanks.

This authorization is effective immediately and remains valid until [Specific Date, e.g., DD/MM/YYYY]. The dip test shall be conducted at the buyer’s expense using standardized methods to ensure compliance with the Sales Purchase Agreement (SPA) dated [SPA Date].

A copy of this authorization has been provided to the Tank Farm Control Tower at [Tank Farm Name]. We request their full cooperation to facilitate prompt completion of the dip test.

For reference, the following details are provided:

  • Tank Numbers: [List Tank Reference Codes]
  • Product: [e.g., EN590 Diesel, JP54, etc.]
  • Tank Storage Receipt (TSR) Reference: [TSR Number, if applicable]
  • Contact for Tank Farm: [Tank Farm Contact Details]

Should you require further information, please contact [Seller’s Contact Name, Title, Phone, Email].

Sincerely, [Authorized Signatory’s Full Name] [Title] [Seller/Tank Leaseholder Company Name] [Contact Information] [Notary Seal, if required]

 

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