The transfer of title in petroleum products may not always be as
straightforward as a supplier and buyer might hope. Petroleum is
fungible in nature, and so can be freely mixed with other products
possessing the same characteristics, with the result that it is not
possible to distinguish the original components within the greater
whole. The legal treatment of mixed petroleum products belonging to
two or more individuals is always an issue when gas is transported
in a multi-shipper pipeline, but is also relevant in LNG trading
and gas storage. Express contractual provision can be made for
situations in which petroleum is mixed with third party stocks
(whether intentionally or otherwise), but where a transaction
involves the buying or selling of part of a larger bulk of goods
and that bulk consists of mixed goods owned by multiple parties,
the various ownership claims to those goods may not always be
clear, despite what has been agreed between the parties.
