Reed Smith Client Alerts

Authors: Paul Skeet

The oil industry group Leadership for Energy Automated Processing (LEAP) has published its Northwest Europe Barge General Terms and Conditions (GTCs).

The new GTCs have been designed to be used by participants in the Amsterdam-Rotterdam-Antwerp refined products, ethanol and biodiesel markets. The GTCs are available to download here (website registration required).

For the last three years, LEAP’s Standardization Committee, which is made up of representatives from a number of oil majors, traders and other market participants, has been developing the LEAP Barge GTCs. Reed Smith acted as legal advisors to the Standardization Committee on this project.

To date, only a few oil majors have published GTCs that specifically address deliveries of oil products on barges. Barge deliveries are by definition small in volume, but the number of spot contracts concluded can be voluminous, typically with only a short turnaround time between trade date and delivery date. Negotiating individual contract terms can nevertheless be just as time-consuming for the parties as negotiating larger deliveries on tankers, with sticking points typically around the contract terms relating to barge nominations, laytime and demurrage.

In barge deliveries, the commencement of laytime depends on a complex interaction between the nominated barge’s ETA, the nomination period, the laydays and the actual barge arrival. The determination of laytime and demurrage also involves consideration of the TTB Rules and German federal law. It is these peculiarities of the barge market that have increased the appetite for standardisation and make this an ideal market for a set of standardised terms.

The new GTCs cover FOB, CIF/ CFR and ‘Ex-Barge’ deliveries. They constitute a comprehensive set of contract terms that (save for the operational aspects of barge nominations and laytime and demurrage) are broadly consistent with other general terms and conditions for oil products commonly used in the market.

LEAP’s intention is that adoption of the new barge GTCs will “reduce confusion, inefficiency, and risk among parties in the trading of oil in this market”.


Client Alert 2015-181