Truck and Rail Annex to the LEAP Master Agreement

Formed in November 2011, the Truck and Rail Annex Committee worked to expand the LEAP Master Agreement in order to also govern deliveries and receipts of oil in North America by tank trucks and railcars.  The new LEAP Tank Truck and Tank Railcar Annex was completed in April 2013.   Members of the committee included representatives of Barclays, BP, Chevron, Glencore, J Aron, Shell and Statoil.

This Initiative was sponsored by the LEAP Board of Directors in response to the industry’s growing use of trucks and railcars to deliver crude and natural gas liquids production from wellhead to terminal in the mid-continent of North America. Also, our members have noted a more active use of these delivery modes as the blending of domestic biodiesel products and ethanol has become more prevalent.

As with the other LEAP Annexes and Addenda, the Truck and Railcar Annex is drafted to allow execution between two counterparties in conjunction with the execution of Master Agreement for Purchasing and Selling Refined Products and Crude Oil Version 2.1.

In general, master agreements simplify individual transaction documentation and facilitate the electronic matching of contractual economic terms. To the extent that a company has executed master agreements across a large portion of their business, they also reduce the legal basis risk inherent in having purchase and sale trade activity on ‘mismatching’ terms. In certain cases, master agreements also allow for the netting of default risk across transactions between two counterparties.

If you have any questions about the Truck and Rail Annex, please email Karen Mikkelborg or call 403-699-4206.