Northwest Europe Barge General Terms and Conditions (GTC) Standardization

In early 2012, the Northwest Europe Barge General Terms and Conditions (GTC) Standardization Committee reunited after a two-year hiatus.  The Committee is made up of contract administration, operations, and legal personnel from BP, Chevron, Mercuria, Morgan Stanley, Phillips66, Shell, and Somtrans, among other industry leaders.  Like our other current and previous Committees focusing on US and Canadian contract standardization, the group’s focus is on developing a common set of definitions, boilerplate contract clauses, optional elections, and a confirmation format for voluntary use by counterparties negotiating and executing bilateral GTCs.

The Committee is working to develop general contract terms for voluntary use in Amsterdam-Rotterdam-Antwerp (‘ARA’) refined products, ethanol, and biodiesel transactions.  This ARA region, although it is made up of several separate and distinct countries, is a very liquidly-traded hub for oil and bio products received and delivered throughout the region and internationally.

Signing bilaterally-agreed GTCs or master agreements based on common industry-accepted contract language allows companies to realize important efficiencies and cost savings by:

  • Reducing the time to generate and send individual confirmations of their trade transactions, as the confirmations will only contain the specific economic and operational terms of the individual trade (the ‘short form’ confirmations)
  • Reducing the time to review and affirm the individual short form confirmations from counterparties
  • Reducing contract basis risk to the extent individual supply and delivery obligations are governed by similar GTCs
  • Reducing or eliminate the need for ‘countering’ confirmations, which is currently done today in cases where GTCs are not agreed between two counterparts of a trade, and the parties send emails and faxes back-and-forth to assert their positions on the details of the terms underlying the trade

In conjunction with this effort, LEAP also developed a draft of a model barge operations timesheet that could be used in this market.  Developed by Operations and Demurrage staff within our committee member firms, this timesheet contains placeholders for all of the time entries necessary to issue a documented claim in a clearly-displayed manner that is consistent with the terms and definitions of the LEAP GTCs.  This timesheet draft is currently available by contacting us.

If you have any questions about the Northwest Europe Barge GTC Standardization Committee, or you would like to join the group, please contact Ed Burns, James Norris, or Kevin Jandora.