What is TTO (Tank Takeover)?

At a glance

What it is used for

TTO is the quickest way to move a parcel that is already in storage, because the slowest part of any other structure — moving the product — is skipped entirely. Sellers use it to exit a position and stop paying rent on a tank they no longer want. Buyers use it when they intended to hold the product anyway and the tank is somewhere that suits them.

How it works, step by step

1. 1The buyer gets accepted by the terminal first. Everything else is theoretical until the terminal has onboarded the buyer as a storage customer — its own KYC, its own timetable, usually weeks. A TTO cannot complete without it, because the tank has to be leased to someone.
2. 2Read the storage agreement being taken over: the remaining term, the rent, the notice period, the throughput and heel provisions, the tank cleaning obligations at the end, and whether the terminal permits novation at all. The buyer inherits all of it.
3. 3Agree the contract: the terminal and the specific tank, the product specification, the quantity as it will be established at takeover, the takeover date, who bears rent either side of it, and what payment is made against.
4. 4The seller evidences the product and the lease — the holding certificate and the storage agreement — and the terminal confirms both are unencumbered and that it will novate.
5. 5An independent inspector attends for a joint gauge and sampling on the takeover date. This is the only measurement there is: with no pumping there is no second set of figures to check it against, so what the gauge says is what the buyer has bought.
6. 6The terminal novates the storage agreement and issues a holding certificate in the buyer's name. Payment follows against that certificate and the certificates of quantity and quality.
7. 7Rent, insurance and responsibility for the product pass to the buyer from the takeover date, including responsibility for the tank's condition and for whatever heel is in it.

Key points

• Nothing moves, so nothing is lost. No line displacement, no ship, no demurrage, no loading window to miss — the fastest completion of the three tank structures.
• The buyer takes the tank as it stands. Its condition, its heel, its remaining lease term and its end-of-lease cleaning obligation all come with the product.
• The terminal decides whether it happens. A storage agreement is between the terminal and its customer; if the terminal will not novate it to the buyer there is no deal, whatever the seller has signed.
• One gauge is the whole measurement. There are no loading figures and no ship's figures to compare against, so the joint gauge must be attended and the samples sealed.

What to watch for

• TTO is used loosely in unsolicited offers, sometimes meaning nothing more than “the product exists”. Ask which terminal, which tank, whose name is on the storage agreement and how much of its term is left. An offer that cannot answer those four questions is not describing a real tank takeover.
• The buyer inherits the end-of-lease obligations. Cleaning a product tank is expensive, and a lease with two months left on it is a bill arriving shortly, not a benefit.
• The heel is part of what you are buying, whether or not anyone mentioned it. Establish at the joint gauge what is actually in the tank and what its specification is.
• Confirm the lease and the holding with the terminal directly, on contact details you found yourself. The seller's copy of a storage agreement proves only that a document exists.

Frequently asked questions

Related terms