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EU To Soften Sunset Clause For Oil Transport Contracts

1 June, 2013: EU laws regulating oil transport contracts have recently been revised, and are set to be put into practice by this Autumn, reports from a conference in Slovenia seem to indicate. 

The lead-in time for this clause, part of the capacity allocation mechanism network code devised by the EU, was thought to be too short, leading to a revision and eventual extension. 

The objective of this new clause, and of the system as a whole, is to avoid end-of-the-pipeline trading, or 'flange trading' on oil transport contracts. Drivers carrying out these types of contracts will hereafter be requested to bundle their transport contracts so that the gas is delivered at a hub point, a measure expected to have a drastic impact on the aforementioned type of negotiation. 

This, too, has been softened, however, after both drivers and shipping companies complained that the new measures might leave them vulnerable to lawsuits. The wording has thus subsequently been changed to make this a slightly less stringent stipulation. 

The deadline for implementation of these measures has also been loosened, from a maximum of five years on the first version of the legislation, released in 2011, to an open date, with a report only being required a full two years after the changes have taken place. The network code has similarly been given more time to establish itself, with the initial one-year deadline being extended to November 1, 2015. 

With the new capacity allocation network code, dubbed the PRISMA, all non-bundled natural gas will be auctioned off in European platforms, of which a number are already studying alternatives. 

Countries that do not yet possess these platforms will see them gradually introduced, dealing with day-ahead product at first and later expanding to monthly and longer-term goals. 

For information on transport contracts, contact Haulage Exchange at www.haulageexchange.co.uk or 020 8896 6725. 

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