There are two accepted ways of performing allocation metering here in Malaysia:
- direct measurement – what you meter (at an approved metering station) is what you get (WYMISWYG, kinda like WYSIWYG). You honour the product metered.
- measurement by difference – You take the furthest downstream meter, subtract all the upstream flows metered by approved meter stations, and the difference is assigned to the unmetered production source.
Kinda obvious that if the downstream meter is negatively biased (undermetering) and the upstream meters are positively biased, the production allocated to the ‘difference source’ will be less than actual.
Throw in the situation that each source might have a different production sharing contract (PSC), different partners and percentage interest, and the calculations as to how much you loose (or gain) can get pretty wild.
Here’s one example I’ve attached (credit goes to an associate for crunching the numbers). What I would like to note is that, even if you have no share in Platform A production, the performance of their metering station affects your crude entitlement. So, a meter you might not have access to (why should you, you don’t own a drop of oil metered through station A), affects your dollars and sense.