A storage and throughput (or 'terminalling') arrangement is the core commercial contract of a fuel terminal. The operator provides tankage and handling; the customer puts product through it. Simple in outline, the deal turns on a handful of mechanics that determine who bears which risk — and getting them right is what makes the asset’s cash flow contracted rather than speculative.
Allocated capacity
The customer reserves a defined amount of tankage — the allocated capacity — for its exclusive use over the term. The storage fee is charged on that allocation whether or not it is full, because the operator has taken the capacity off the market. The customer cannot exceed its allocation without agreement, and unused space does not reduce the fee. This is the annuity-like backbone of terminal revenue.
Custody, not title
A terminal operator takes custody of product but never owns it. Title stays with the customer (or its principals) throughout; the operator holds the product as bailee. That distinction matters: it shapes insurance, it limits the operator to (at most) a contractual lien for unpaid fees, and — where product of the same grade is commingled in shared tanks — it means the customer is entitled to a like quantity and quality of product back, not to specific molecules.
Measurement and operational losses
Fuel evaporates, expands with temperature and leaves residue, so a terminalling deal must say who bears normal losses. The standard approach is a loss allowance: the customer absorbs operational and evaporation losses up to an agreed percentage of throughput, and the operator answers for losses beyond that allowance to the extent they result from its negligence or breach. Quantities are settled by calibrated meters or certified tank gauging, adjusted to a standard temperature, and reconciled periodically.
- Receipt and redelivery measured by calibrated meters or certified dips.
- A defined loss allowance (e.g. a fraction of a percent of throughput) borne by the customer.
- Excess losses to the operator’s account where caused by its negligence or breach.
- Periodic stock reconciliation against the customer’s balance.
Take-or-pay
The take-or-pay commitment is what turns a terminal into an investable asset. The customer commits to a minimum annual throughput; if actual volume falls short, it pays the throughput fee on the deficiency as if the product had been handled. This guarantees the operator a revenue floor independent of market swings — the single most important term for financiers and equity investors assessing the asset.
These are the standard building blocks, not a substitute for tailored drafting. The right loss allowance, take-or-pay level, custody and liability terms depend on the product, the facility and the parties — settle them with qualified counsel.
The documents
The storage & throughput agreement template captures all of the above — allocated capacity, custody, loss allowance and take-or-pay. Where the same operator also buys or sells product, the fuel supply agreement template handles the sale leg. Both are fillable here, generate a clean PDF, and can be signed online with a self-hosted audit trail.