Product Verification in Petroleum Trading: Dip Tests, SGS Reports, and Documentation Explained

You're negotiating a $2 million petroleum deal. The seller has impressive documents – SGS reports, Tank Storage Receipts, certificates. Everything looks professional. But here's the question that should keep you awake at night: does the product actually exist?

Not "did it exist when these documents were created six months ago," but does it exist right now in the tank they claim, in the quantity they're stating, meeting the specifications you need. Because if it doesn't, your $2 million is gone and you're left holding worthless paperwork.

Product verification is your primary defense against petroleum trading scams. This guide covers every verification method available – from SGS inspections to dip tests to document authentication – including what each proves, what it costs, and critically, what it doesn't prove.

Why Verification Matters More Than You Think

The fundamental risk in petroleum trading is simple: you're about to send hundreds of thousands or millions of dollars for product you've never seen, sold by someone you've never met, stored at a terminal you've never visited. The seller provides documents claiming the fuel exists and meets specifications. But documents are just paper or PDFs. They can be faked, altered, or genuinely issued months ago for product that's long since been sold to someone else.

Verification prevents you from paying for non-existent product, buying fuel the seller doesn't actually own or control, receiving off-spec or contaminated diesel that you can't legally sell, getting shorted on quantity (paying for 10,000 MT while receiving 9,200 MT), and falling for sophisticated document fraud that looks completely legitimate until you try to verify it.

The iron rule of petroleum trading: never pay significant money without verifying the product exists and meets specifications. Documents start the conversation, but verification closes the deal.

SGS Reports: Third-Party Inspection Certificates

SGS (Société Générale de Surveillance) is one of the world's leading inspection companies, and their reports are the gold standard for petroleum verification. When people say "SGS report," they're usually referring to independent laboratory analysis documenting product quality and quantity. Similar companies include Intertek, Bureau Veritas, Saybolt, and for China-related transactions, CIQ or CCIC.

SGS inspectors physically visit the storage location, take product samples from the tank, measure volume using calibrated equipment, conduct detailed laboratory analysis of quality parameters, and issue official reports documenting everything. These are independent third-party inspectors with no financial interest in whether your deal succeeds – they're just documenting what they find.

There are several types of reports you might encounter. Quality reports test product specifications like sulfur content, density, cetane number, and all other parameters to confirm the fuel meets standards like EN590. Quantity reports measure and verify the volume or mass of product. Quality & Quantity (Q&Q) reports combine both in a single document – this is what you'll see most often in petroleum trading. Witnessing services involve SGS observing and documenting loading onto vessels or discharge at destination ports.

Getting an SGS Inspection

The process starts with contacting SGS directly – find the local office serving the storage location or use SGS's website. Request a quote specifying the product type, terminal location, and services you need (quality only, quantity only, or Q&Q). SGS provides a cost estimate and timeline, you accept and schedule the inspection date, and you provide details about tank location, access arrangements, and product specifications to test.

The inspector visits the site, takes samples from multiple points in the tank to ensure representative analysis, measures quantity using appropriate methods, and sends samples to an accredited laboratory for detailed testing. The report is typically issued 24-48 hours after inspection, though it can take longer for complex analysis or remote locations. You then pay SGS's invoice – buyers usually pay for inspection, though some contracts split costs 50/50.

The entire process from initial request to receiving the report typically takes 3-7 days, sometimes longer for complex requirements or remote locations. This timeline matters when sellers claim they can provide "fresh SGS within 24 hours" – unless they already had it scheduled, that's unrealistic.

What SGS Inspections Cost

Inspection costs vary based on volume and complexity but are predictable. For small volumes (1,000-5,000 MT), expect $1,500-$3,000. Medium volumes (5,000-20,000 MT) typically run $2,500-$5,000. Large volumes (20,000+ MT) cost $4,000-$8,000 or more. Additional witnessing services add $1,000-$3,000.

Location significantly affects costs – remote terminals cost more than major trading hubs. Product complexity, urgency, and special requirements also drive prices up. But even at the high end, inspection costs are modest relative to transaction values. Spending $5,000 to verify a $2 million purchase is 0.25% insurance against total loss.

Understanding "Fresh" SGS Reports

You'll constantly see requirements for "fresh SGS report less than 48 hours" or similar phrases. The timing matters because a fresh report proves product exists now, not that it existed months ago when someone last inspected it. Current reports show today's quality (product hasn't degraded since testing), confirm current quantity (product hasn't been sold to someone else), and dramatically reduce the risk of "paper product" – fuel that exists perfectly on documents but hasn't physically been in a tank for months.

Age guidelines work like this: reports less than 48 hours old are ideal and exactly what professional buyers demand. Less than 7 days is acceptable if you can verify with the terminal that product is still there. Less than 30 days is old but might work if you're conducting your own verification anyway and using the old report just for specifications reference. Months-old reports are major red flags – the product was almost certainly sold long ago.

Verifying SGS Report Authenticity

This is absolutely critical: fake SGS reports exist and some are very convincing. Always verify reports directly with SGS before relying on them. Every genuine SGS report has a unique reference number. Look up SGS's official contact information from their website – never use contact details from the report alone, as sophisticated scammers create fake reports with their own phone numbers listed as "SGS."

Call or email the appropriate SGS regional office, provide the report number, and ask them to confirm it's genuine, when the inspection was conducted, what location was inspected, and what product and quantity were documented. Compare their confirmation against the report details – everything should match exactly. Get written confirmation via email so you have documentation of the verification.

Don't skip this step. Verifying takes 10 minutes and a phone call. Discovering you relied on a fake report after you've sent payment takes lawyers, years, and often results in total loss.

What SGS Reports Prove (and Don't Prove)

A genuine, recent SGS report confirms the product was physically present at the inspection location when the inspector visited. It documents quality specifications measured at that specific moment, the quantity measured then, the tank location and conditions, and provides independent third-party verification that you can rely on for contracts and banking.

But SGS reports don't prove the seller owns the product – they just confirm someone's product is in a specific tank. They don't verify the seller can legally sell it or has authority from the owner. If the report is old, they don't confirm product is still there now. They tell you nothing about whether the price is fair or the seller is legitimate or trustworthy.

Remember this distinction: SGS verifies the product, not the seller. You need both verifications to proceed safely.

Dip Tests: Physical Tank Inspection

A dip test is exactly what it sounds like – physically going to the storage tank and "dipping" a measuring device into it to verify product exists and measure quantity. Think of it as seeing the fuel with your own eyes, or more precisely, having an independent inspector see it for you.

The process starts with the seller providing Dip Test Authorization (DTA) granting you permission to access the tank. You coordinate with the storage terminal to schedule the visit, comply with their safety procedures and requirements, and bring an independent inspector or your representative. At the tank, the inspector lowers a calibrated measuring tape to the tank bottom, notes the product depth, and calculates volume based on the tank's known dimensions and calibration charts.

The inspector also takes samples at different depths for visual inspection and basic quality checks like density and appearance. For more thorough analysis, samples can be sent to a laboratory for full specification testing, though this adds cost and time. The entire process is documented with measurements, photographs if permitted, and a dip test report. The physical inspection itself typically takes 2-4 hours.

Dip Test Costs and Value

Basic dip testing costs $500-2,000 depending on location and inspector fees. This includes the inspector's fee ($500-$1,500), terminal access charges ($200-$500), and basic sample analysis ($200-$500). If you want full laboratory testing of the samples, add another $1,000-$2,000, bringing the total to $1,500-$4,000.

Dip tests are appropriate for larger first-time purchases (typically $100,000+), working with new suppliers where you have no track record, tank-to-tank or tank-to-vessel transactions where you have access, and situations where the transaction size justifies the cost. They're less necessary for small trial orders where verification costs become a significant percentage of the purchase, when using Letters of Credit where banks verify documents independently, for established suppliers with proven track records, or when a recent verified SGS report is available.

What Dip Tests Show

Dip tests confirm the product physically exists in the specified tank – you or your inspector literally saw it. They provide approximate quantity measurements, basic quality indicators from visual inspection and simple tests, and verification of tank location and storage conditions.

The limitations are important to understand. Dip tests aren't full quality specification testing unless you pay for laboratory analysis of samples. Quantity measurements are approximate – tank gauging isn't as precise as flow meters used during actual transfers. And like SGS reports, dip tests don't prove ownership or the seller's authority to sell.

Tank Storage Receipts: Warehouse Documentation

A Tank Storage Receipt (TSR) is the terminal's acknowledgment that specific product is stored in their facility. It's essentially a warehouse receipt for petroleum – the terminal confirms they're holding this much of this product in this tank for this client.

A proper TSR should contain the terminal's name and full address, specific tank number(s) where product is stored, detailed product description and specifications, quantity (volume and/or mass), a barcode or unique reference number for tracking, GPS coordinates of the tank location, date of issuance, the terminal's official signature and seal, and contact information for the terminal. If any of these elements are missing, the TSR is incomplete and suspicious.

Verifying TSR: The Critical Step

Never trust a TSR at face value – verification is mandatory. Fake TSRs are extremely common in petroleum scams. Get the TSR details from the seller including terminal name, reference or barcode number, and tank number. Then independently look up the terminal's official contact information from their website or public sources – don't use contact details from the TSR alone.

Call or email the terminal directly, provide the TSR reference number, and ask them to verify whether the TSR is genuine, whether product is currently in the specified tank, what quantity is there now, and critically, who controls this product. You also need to verify that the seller has authority to sell it – ask whether there's an Authorization to Sell on file.

Get written confirmation via email documenting their responses. This creates a paper trail if problems arise later.

Common TSR Problems

When you verify a TSR, you might encounter problems that immediately kill the deal. The terminal might not recognize the reference number – it's fake. They might say "that TSR is from six months ago" – the receipt was genuine but the product is long gone. They could tell you "the product was sold last month" – again, real receipt but product no longer exists. Or most damning, "a different company controls that product" – the seller you're negotiating with has no authority over it.

Any of these responses means you stop the transaction immediately. Don't try to work around it or accept explanations. If the TSR doesn't verify or the seller doesn't control the product, there's no legitimate deal to complete.

Watch out for vague TSRs that have no specific tank number, no GPS coordinates, no barcode or reference you can verify, or look like generic templates. These suggest the seller doesn't actually have product stored there and is hoping you won't verify.

Authorization Documents: Proving Legal Right

Authorization documents prove the seller has legal right to access, verify, and sell the petroleum product. There are several types you'll encounter.

Authorization to Verify (ATV) is the seller's permission for you to inspect the product. This is necessary because you can't just show up at a secure terminal and ask to see tank number 7 – the terminal requires written authorization from whoever controls that product. A proper ATV specifies your company name, the exact tank and location you're permitted to inspect, the scope of verification you can conduct, valid dates for access, and the seller's signature and company details.

If a seller refuses to provide ATV, ask yourself why. If they have real product and legitimate authority, they want you to verify it. Refusal suggests there's nothing to verify or they don't actually control access.

Authorization to Sell (ATS) or Authorization to Sell and Collect (ATSC) documents show the seller has authority to sell this specific product. These are typically issued by the terminal, refinery, or product owner, and they confirm the seller controls the product, has legal right to sell it, and it isn't tied up in other deals or legal disputes.

Verify ATS documents by contacting the issuer directly – the terminal, refinery, or owner who supposedly authorized the sale. Confirm the authorization is genuine, current, and actually covers this specific product and quantity.

For vessel transactions, Authorization to Board (ATB) serves the same function as ATV but for inspecting product on ships rather than in tanks.

Complete Verification Process

Effective verification uses multiple methods together rather than relying on any single approach. Start with document verification: get the SGS or inspection report and verify it directly with SGS by calling them. Ensure the report is recent, ideally less than 30 days and preferably less than 48 hours. Get the Tank Storage Receipt and verify it with the terminal directly, confirming product currently exists. Obtain Authorization to Verify and Authorization to Sell, then verify the ATS with whoever issued it.

For physical verification on larger purchases, either conduct a dip test or accept a recently verified inspection report. If you do a dip test, have samples tested to confirm specifications. Verify the product meets specifications and quantity matches expectations.

Finally, verify the seller's authority by confirming with the terminal that the seller controls the product, can authorize its sale, and there are no conflicting claims. Verify basic company details to ensure you're dealing with a legitimate entity.

Only when all these verifications check out should you proceed to contract and payment. If any verification fails or can't be completed, don't proceed – the risk is too high.

Verification Costs in Perspective

Let's put costs in perspective. A comprehensive SGS Q&Q report might cost $1,500-$8,000 depending on volume and location. A dip test runs $500-$2,000 for basic verification. Verifying a TSR with the terminal is free – it's a phone call. Verifying documents with issuers is free – phone calls and emails. A complete verification package using multiple methods typically costs $2,000-$10,000 all-in.

On a $500,000 purchase, spending $5,000 on verification is 1% insurance against total loss. On a $5 million purchase, $10,000 in verification costs is just 0.2%. These percentages are trivial compared to the risk you're mitigating. Every penny spent on proper verification is worth it to avoid scams.

Common Verification Mistakes

The biggest mistake is accepting documents without verification. Buyers receive official-looking SGS reports and TSRs, assume they're real because they look professional, and proceed without calling SGS or the terminal. By the time they discover the documents are fake, they've already sent payment.

Another critical error is using contact information from the documents themselves. Scammers create fake SGS reports with their own phone number listed as "SGS verification." When you call, their accomplice answers as "SGS" and confirms the fake report. Always get contact information from official websites independently.

Some buyers skip verification to save money, viewing $2,000 for a dip test as expensive on a $1 million purchase. This is false economy. The 0.2% cost prevents 100% loss. Verification isn't an expense – it's insurance.

Others make the mistake of verifying that old documents are genuine without confirming the product still exists. Yes, that SGS report from six months ago is real – SGS confirms they issued it. But the product was sold five months ago. Verify both document authenticity and current status.

Finally, never trust "trust me." When sellers say verification isn't necessary because they're legitimate and you should trust them, that's when you need verification most. Legitimate sellers welcome verification because they know it builds confidence. Scammers resist it because there's nothing to verify.

Red Flags That Should Stop You

Certain warning signs should make you walk away immediately. Sellers who refuse verification, won't provide Authorization to Verify, block direct contact with terminals or SGS, provide documents that can't be verified, or get defensive about verification requests are showing you exactly who they are – believe them.

Watch for sellers who rush you past verification claiming "product is selling fast" or "other buyers are waiting." This artificial urgency prevents you from conducting proper due diligence. Real product doesn't disappear in 24 hours, and legitimate sellers understand verification takes time.

Very old documents (months old), vague documents lacking specific details, terminals that don't recognize the seller, and sellers who demand "verification fees" payable to them rather than to independent third parties are all major red flags.

Any of these individually should give you pause. Multiple red flags together mean you should walk away entirely.

Working with Professional Sellers

Professional petroleum sellers welcome verification because they understand it's standard industry practice and protects both parties. They provide complete documentation willingly, allow and even facilitate independent inspection, support your direct contact with terminals and inspection companies, are patient with your verification process, and have verifiable track records you can check.

Scammers do the opposite. They refuse or severely restrict verification, rush you to skip due diligence, block direct contact with third parties, get defensive or angry when you insist on verification, and can't provide documentation that actually verifies.

The difference is usually obvious once you know what to look for. Trust your instincts – if something feels wrong or the seller is making verification difficult, there's probably a reason.

Bottom Line

Product verification is non-negotiable in petroleum trading. Use multiple verification methods together: get SGS reports and verify them with SGS, get TSRs and verify them with terminals, conduct dip tests for appropriate purchases, and verify all authorization documents with issuers.

Never skip verification to save money (false economy), save time (rush leads to scams), or because you trust the seller (trust but verify – always). Budget for verification as part of your purchase costs, plan time for proper verification in your transaction timeline, and understand that verification protects you from the vast majority of petroleum trading fraud.

Remember: documents can be faked, stories can be convincing, but physical product either exists or it doesn't. Verification determines which category you're in. Use it religiously and you'll avoid most scams. Skip it and you're gambling with hundreds of thousands or millions of dollars.

Take Action

Submit an RFQ on CommoditiesHub and work with verified suppliers who welcome thorough product verification. Professional petroleum sellers understand that verification isn't an insult to their integrity – it's the foundation of legitimate international trade. They provide complete documentation, support independent inspections, facilitate direct terminal contact, and respect your need to verify before committing capital.

Start your petroleum procurement with confidence through proper verification. The few thousand dollars and extra days it takes can save you from million-dollar losses.