LEAP Master Version 3 Committee

Leadership for Energy Automated Processing (“LEAP”) has established a Committee to address the modification of our Master Agreement “suite” that governs the purchase and sale of physical crude oil, refined products, liquefied petroleum gas, natural gas liquids, and RINs within the North American market (the “LEAP Suite”).  Our flagship agreement, the Master Agreement for Purchasing and Selling Refined Petroleum Products and Crude Oil (the “LEAP Master Agreement”), has been in use since 2007 and formed the basis of the ISDA Oil Annex.  In response to recent changes in market practice due to regulatory and commercial factors, LEAP’s members have determined that it is necessary and worthwhile to update the LEAP Suite to reflect these market changes.

Master agreements, like the LEAP Master Agreement, are utilized by counterparties for several reasons, including, to: (i) obtain agreement on legal, credit and operational terms; (ii) obtain transaction simplification; and (iii) facilitate the electronic matching of trades.  Where one party and another party buy and sell crude oil with each other regularly, it makes sense that they would want to obtain agreement on the general terms that govern their trades, like payment netting, close-out netting, governing law and dispute resolution, set off, and credit support, among other things.  Once a LEAP Master Agreement is executed, transactions become simplified because individual trade confirmations only need to include the economic terms of a trade.  And, once a LEAP Master Agreement is executed, parties can forego paper confirmations altogether by using an online matching platform, such as ICE eConfirm, to confirm their trades.

The LEAP Suite was originally prepared by various LEAP Committees comprising representatives of certain LEAP member companies and non-member companies and were the first such agreements with common use in the North American oil market.  The Version 3 committee is made up of oil trading companies such as BP, Castleton. Hess, JP Morgan, Morgan Stanley, Nexen, Noble, Shell and Statoil as well as representatives from ISDA.  Comments and suggested updates to the LEAP Suite can be made by contacting Kevin Jandora (KJandora@energyleap.org), Project Manager for LEAP.