Hydrocarbon management HM 82. Model general terms and conditions for free on board (FOB) sale and purchase of petroleum products

Transcription

1 Hydrocarbon management HM 82 Model general terms and conditions for free on board (FOB) sale and purchase of petroleum products

2 HM 82 MODEL GENERAL TERMS AND CONDITIONS FOR FREE ON BOARD (FOB) SALE AND PURCHASE OF PETROLEUM PRODUCTS 1st edition July 2016 Published by ENERGY INSTITUTE, LONDON The Energy Institute is a professional membership body incorporated by Royal Charter 2003 Registered charity number

3 The Energy Institute (EI) is the chartered professional membership body for the energy industry, supporting over individuals working in or studying energy and 250 energy companies worldwide. The EI provides learning and networking opportunities to support professional development, as well as professional recognition and technical and scientific knowledge resources on energy in all its forms and applications. The EI s purpose is to develop and disseminate knowledge, skills and good practice towards a safe, secure and sustainable energy system. In fulfilling this mission, the EI addresses the depth and breadth of the energy sector, from fuels and fuels distribution to health and safety, sustainability and the environment. It also informs policy by providing a platform for debate and scientifically-sound information on energy issues. The EI is licensed by: the Engineering Council to award Chartered, Incorporated and Engineering Technician status; the Science Council to award Chartered Scientist status, and the Society for the Environment to award Chartered Environmentalist status. It also offers its own Chartered Energy Engineer, Chartered Petroleum Engineer and Chartered Energy Manager titles. A registered charity, the EI serves society with independence, professionalism and a wealth of expertise in all energy matters. This publication has been produced as a result of work carried out within the Technical Team of the EI, funded by the EI s Technical Partners. The EI s Technical Work Programme provides industry with cost-effective, value-adding knowledge on key current and future issues affecting those operating in the energy sector, both in the UK and internationally. For further information, please visit The EI gratefully acknowledges the financial contributions towards the scientific and technical programme from the following companies BP Exploration Operating Co Ltd RWE npower BP Oil UK Ltd Saudi Aramco Centrica Scottish Power Chevron SGS CLH Shell UK Oil Products Limited ConocoPhillips Ltd Shell U.K. Exploration and Production Ltd DCC Energy SSE DONG Energy Statkraft EDF Energy Statoil ENGIE Talisman Sinopec Energy (UK) Ltd ENI Tesoro E. ON UK Total E&P UK Limited ExxonMobil International Ltd Total UK Limited Kuwait Petroleum International Ltd Tullow Oil Maersk Oil North Sea UK Limited Valero Nexen Vattenfall Phillips 66 Vitol Qatar Petroleum World Fuel Services However, it should be noted that the above organisations have not all been directly involved in the development of this publication, nor do they necessarily endorse its content. Copyright 2016 by the Energy Institute, London. The Energy Institute is a professional membership body incorporated by Royal Charter Registered charity number , England All rights reserved No part of this document may be sold, licenced, or incorporated into other documents for commercial purposes, without the written permission of the publisher. Organisations wishing to use these terms as part of their commercial contracts should apply to the Energy Institute for a licence. pubs@energyinst.org for more information. This document should not be transmitted to other users who should be directed to register with the EI and download personal copies (all free of charge) from ISBN Published by the Energy Institute The information contained in this publication is provided for general information purposes only. Whilst the Energy Institute and the contributors have applied reasonable care in developing this publication, no representations or warranties, express or implied, are made by the Energy Institute or any of the contributors concerning the applicability, suitability, accuracy or completeness of the information contained herein and the Energy Institute and the contributors accept no responsibility whatsoever for the use of this information. Neither the Energy Institute nor any of the contributors shall be liable in any way for any liability, loss, cost or damage incurred as a result of the receipt or use of the information contained herein. Hard copy and electronic access to EI and IP publications is available via our website, Documents can be purchased online as downloadable pdfs or on an annual subscription for single users and companies. For more information, contact the EI Publications Team. e: pubs@energyinst.org

4 Contents Pages Foreword....5 Acknowledgements...6 Introduction Applicability of these general terms and conditions Delivery Title and risk Quantity and quality The extent of the seller s obligation Determination Quantity and quality claims Price and payment Price and invoicing Payment Payment documents Letter of credit Security Non-compliance with payment terms Other payment terms Vessel and terminal obligations The performing vessel Loading terminal and berth Operational provisions Loading terminal nominations Vessel nominations Vessel rejection or acceptance Vessel s estimated time of arrival (ETA) Arrival of the performing vessel Shifting STS operations Vacation of berth Berth utilisation Port and loading expenses Laytime Demurrage rate Exceptions to laytime and demurrage Demurrage claims Non-performance Force majeure Default and termination

5 Contents cont... Pages 9 Taxes and licences Applicability VAT/GST/similar tax EU customs and excise duty or mineral oil tax Other taxes and duties etc Licences Limitation of liability Notices and communications Recording, retention and monitoring of communications Destination and sanctions compliance Destination Trade controls and boycotts Facilitation payments and anti-corruption Representations, amendments and waivers No representations Amendments Waivers Rights, powers and remedies Interpretative provisions Health, safety and environment Reach Safety data sheet (SDS) The buyer s responsibilities Liability Trademark Assignment Governing law Jurisdiction Electronic documents...48 Annexes Annex A Defined terms...49 Annex B Confirmation of FOB sale agreement

6 FOREWORD The Hydrocarbon Management Committee (HMC) of the Energy Institute (EI) produces and maintains documents covering various aspects of hydrocarbon management. These are produced through a number of sub committees and sister committees. The General Terms and Conditions Hydrocarbon Trading Committee focuses on development of standard documents for the trading sector. These documents are voluntary but their adoption should help to reduce uncertainty and the need for individual negotiation. It is intended that these Model General Terms and Conditions will evolve to meet the changing needs of industry. To this end it is important that industry users provide feedback on experiences with the use of these terms. This information can then be taken into account when the Committee reviews and revises this document. Users are invited to send comments or details of experience with the use of this document to: Technical Manager Hydrocarbon Management Energy Institute 61 New Cavendish Street London W1G 7AR e: technical@energyinst.org 5

7 ACKNOWLEDGEMENTS The EI wishes to acknowledge the contribution of all members of the General Terms and Conditions Hydrocarbon Trading Committee to the preparation of this document and in particular the contribution of Reed Smith LLP who provided valuable assistance with both drafting and legal input. 6

8 INTRODUCTION BACKGROUND Many of the major international trading companies produce their own in-house General Terms and Conditions (GTCs) for physical product trading and these can vary considerably in their approach to key contract issues. Trading companies and other parties normally do not develop their own terms and, depending on the particular trade, will either accept the in house terms proposed by their counterparty, if they have them, possibly with negotiation and modification of various terms, or will use a modified set of terms based on one of the in house sets, again, frequently with negotiated changes. Variations in terms can cause significant difficulties when back to back contracts are involved. Sister documents are: HM 80 Model general terms and conditions for free on board (FOB) sale and purchase of crude oil HM 81 Model general terms and conditions for cost, insurance and freight (CIF) and cost and freight (CFR) sale and purchase of crude oil HM 83 Model general terms and conditions for cost, insurance and freight (CIF), cost and freight (CFR) and delivery at place (DAP) sale and purchase of petroleum products PURPOSE OF THESE MODEL TERMS These Model General Terms and Conditions have been developed with the intent of providing a commonly known, commercially neutral set of contract terms which parties may use on a voluntary basis. Use of these terms will hopefully facilitate contract certainty for traders operating in this market and will reduce transaction costs which arise if contracts have to be negotiated for individual deals. Wider adoption of these terms will also facilitate moves towards electronic trading. Users are reminded that the information contained in these Model General Terms and Conditions is provided for guidance only and while every reasonable care has been taken to ensure the accuracy of its contents as at the date of publication, the Energy Institute cannot accept any responsibility for any action taken, or not taken, on the basis of this information. The Energy Institute shall not be liable to any person for any loss or damage which may arise from the use of any information contained in any of its publications and the use of these Model General Terms and Conditions does not replace the need for separate legal and tax advice in relation to specific transactions. 7