During a cargo transfer to a shuttle tanker, an FPSO suffered a loss of stability such that the vessel’s metacentric height was reduced well below that required by the installation’s classification society approved loading manual. This was due to excessive free surface effect. The main cause of the incident was found to have been caused by failure of the remote tank gauging system. This led the control room operator incorrectly to assume the tank was empty. Following the incident the FPSO operator has elected to review its management procedures.