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# LNG Boil-Off, Quantity and Energy Invoicing in Finance
- URL: https://blog.financely.io/lng-cargo-quantity-boil-off-and-energy-invoicing-in-trade-finance/
- Published: 2026-11-14T16:04:05.000Z
- Updated: 2026-11-14T16:04:05.000Z
- Description: LNG is sold and invoiced in units of energy, usually millions of British thermal units (MMBtu), not in tonnes or cubic metres. The invoiced energy is calculated from the volume of liquid transferred, its density and its gross calorific value, less the gas displaced during.
- Author: Financely Debt Advisors
- Tags: LNG Trade Finance, Commodity Trade Finance, Trade Finance

LNG is sold and invoiced in units of energy, usually millions of British thermal units (MMBtu), not in tonnes or cubic metres. The invoiced energy is calculated from the volume of liquid transferred, its density and its gross calorific value, less the gas displaced during transfer and, where agreed, the gas the ship burns while loading or unloading. Some cargo also evaporates on the voyage as boil-off. For trade finance, this means the value a lender advances against is not fixed until the cargo is measured at the agreed custody transfer point.

## Why LNG is invoiced in energy

Gas from different fields has different compositions, so the same volume of LNG can carry different amounts of energy. Buyers pay for the heat they can use. That is why LNG contracts price in a currency per MMBtu and why the invoice depends on gas quality as well as quantity. If you are pricing against JKM, TTF or Henry Hub, the index is also quoted per MMBtu. See [JKM, TTF and Henry Hub in LNG trade finance](https://blog.financely.io/jkm-ttf-henry-hub-lng-trade-finance/).

## How the delivered energy is calculated

The GIIGNL LNG Custody Transfer Handbook, the industry reference for measurement, sets out a general formula. In plain terms, the energy transferred equals:

- the **volume** of LNG transferred, measured from tank levels before and after loading or unloading, multiplied by
- its **density**, multiplied by
- its **gross calorific value**, from sampling and gas analysis,
- minus the **energy of the gas displaced** back to shore during the transfer,
- plus or minus, where the parties agree, the **gas consumed in the ship's engine room** between the opening and closing custody transfer surveys.

The handbook says five elements must be measured or calculated: volume, density, gross calorific value, displaced gas and any engine room gas. GIIGNL published a 7th edition of the handbook in 2026\. Your contract should name the edition and method that applies.

## Boil-off and heel

LNG is kept at very low temperature. Even in insulated tanks, some of it warms and evaporates during the voyage. This boil-off gas is either burned as fuel by the ship or handled by the ship's systems. Either way, less LNG arrives than was loaded.

A heel is the small quantity of LNG that stays in the tanks after unloading to keep them cold for the next voyage. The GIIGNL handbook notes that a heel usually remains on board after unloading, although operators sometimes strip the tanks to maximise delivery. Who owns the heel, and whether it is paid for, should be clear in the charter and the sale contract.

## Why this matters for financing

| Measurement issue                        | Effect on the trade                 | What a lender checks                                               |
| ---------------------------------------- | ----------------------------------- | ------------------------------------------------------------------ |
| Measurement point (loading or discharge) | Decides which quantity is invoiced  | Delivery term and the invoice documents named in the LC            |
| Boil-off during the voyage               | Less energy arrives than was loaded | Who bears the loss under each contract; charter boil-off allowance |
| Engine room gas                          | Changes the net energy transferred  | Whether the contract allows it and how it is measured              |
| Gas quality (calorific value)            | Changes the invoice per cubic metre | Quality specification and the remedy if it is out of range         |
| Heel                                     | Gas retained on board               | Ownership and payment for the heel                                 |
| Measurement disputes                     | Delays final invoice and payment    | Independent surveyor, dispute clause, provisional invoicing        |

An FOB buyer pays on loaded energy but sells delivered energy if its own sale is delivered. The difference is boil-off and engine room gas over the voyage, and it is a cost the buyer carries. If the margin on the trade is thin, a measurement loss can wipe it out. Lenders will test the margin after these losses, not before.

Under the GIIGNL practice, energy is determined at the loading port for FOB sales and at the unloading port for CIF, CFR and DES sales. Our guide to [LNG delivery terms](https://blog.financely.io/lng-delivery-terms-fob-dap-and-des-in-trade-finance/) explains how the delivery term sets the measurement point.

## Provisional and final invoices

Many LNG sales use a provisional invoice based on estimated quantity, followed by a final invoice when the custody transfer report is issued. A letter of credit should allow for that. If it only pays against a final invoice, the seller may wait longer to be paid. If it pays against a provisional invoice, the buyer and its bank need a clear adjustment mechanism. See [letter of credit structures for LNG cargoes](https://blog.financely.io/letter-of-credit-structures-lng-cargoes/).

Receivables finance also depends on final numbers. A lender buying or advancing against an LNG receivable will discount for the risk that the final invoice is lower than the provisional one. See [receivables finance for LNG traders with utility buyers](https://blog.financely.io/receivables-finance-lng-traders-utility-buyers/).

## Documents that support the numbers

- The custody transfer survey report, opening and closing, signed by the ship and the terminal, with an independent surveyor where the contract requires one.
- The quality certificate, with the gas analysis and gross calorific value.
- The calculation of displaced gas and engine room gas, if allowed.
- The charter party clauses on boil-off and heel.
- The provisional and final invoices and any adjustment statement.

## Questions to settle in the contracts and the charter

- Which edition of the GIIGNL handbook, or which other measurement standard, governs custody transfer?
- Is the ship allowed to burn cargo gas in the engine room during loading or unloading, and how is that measured?
- What boil-off allowance does the charter give, and who pays if actual boil-off is higher?
- Who owns the heel at the end of the voyage, and is it invoiced?
- Which surveyor is appointed, who pays for it, and how are measurement disputes resolved?
- When is the final invoice issued, and how are provisional amounts adjusted?

Settling these points before the cargo loads avoids most of the disputes that delay payment and frustrate lenders.

## How to present measurement risk to a lender

Lenders do not expect a trader to remove measurement risk. They expect it to be understood and priced. A good file shows the expected loaded and delivered energy, the boil-off allowance in the charter, how the purchase and sale contracts treat losses, and the margin after those losses. If you have a measurement history on the route, include it. If you do not, say so and show the contractual protections instead.

Financely helps LNG traders build that analysis into the credit file and approach suitable banks and capital providers. Financely acts as advisor and arranger only. See the [oil and gas trade finance advisory](https://www.financely.io/oil-and-gas-trade-finance-advisory-for-crude-oil-bonny-light-en590-diesel-gasoil-lng-jet-a1-and-refined-petroleum-product-transactions?ref=blog.financely.io) and the [structured trade and commodity finance advisory](https://www.financely.io/structured-trade-commodity-finance-advisory?ref=blog.financely.io) pages.

## Frequently Asked Questions

### Why is LNG invoiced in MMBtu?

Because buyers pay for energy and LNG composition varies. The invoice is calculated from volume, density and gross calorific value, so the same volume can carry different amounts of energy.

### What is boil-off in an LNG cargo?

Boil-off is LNG that evaporates during the voyage as it warms slightly in the tanks. It is usually burned as ship fuel or handled by the ship's systems, so less LNG arrives than was loaded.

### What is an LNG heel?

A heel is LNG left in the cargo tanks after unloading to keep them cold. Who owns and pays for the heel should be clear in the charter and the sale contract.

### How does boil-off affect LNG trade finance?

It reduces the delivered energy and therefore the sale proceeds if the trader buys on loaded quantity and sells on delivered quantity. Lenders test the trade margin after boil-off and other measurement losses.

**Have a live cargo or a signed contract?**

Send the contracts, the charter terms and your expected loaded and delivered quantities through the intake form. Financely checks the margin after measurement losses before the file goes to lenders.

[Submit your deal](https://www.financely.io/deal-submission?ref=blog.financely.io)

See the scope of the [structured trade and commodity finance advisory](https://www.financely.io/structured-trade-commodity-finance-advisory?ref=blog.financely.io).

*Financely is an advisor and arranger. It does not lend, issue instruments or take title to cargo, and no financing outcome is promised. This article is general information, not legal, tax or sanctions advice.*

Sources and references (checked 14 November 2026)

1. [GIIGNL, LNG Custody Transfer Handbook, 6th edition (PDF hosted by Snam)](https://www.snam.it/content/dam/snam/pages-attachments/it/i-nostri-business/rigassificazione/documents/codice-tariffe-area-comitato/codice-di-rigassificazione-fsru-italia/manuali-terminale/giignl%5Fcustody%5Ftransfer%5Fhandbook%5F6.0%5F-%5Fmay%5F21%5F0-1.pdf?ref=blog.financely.io)
2. [GIIGNL, Custody Transfer Handbook, 7th edition (2026), resource page](https://www.giignl.org/resources/custody-transfer-handbook-7th-edition-2026?ref=blog.financely.io)
3. [U.S. Energy Information Administration, Liquefied natural gas explained](https://www.eia.gov/energyexplained/natural-gas/liquefied-natural-gas.php?ref=blog.financely.io)