4 N/A N/A N/A 5 Project team road map (1) The team agreed to discuss the rest of the remaining contract terms the next day. 6 Break between days N/A N/A N/A 7 Recap on previous day The team reflected: Liabilities and indemnities are generally a point of contention in commercial negotiations, and hence the amount of discussion is not surprising. A simple secondary agreement may be beneficial in facilitating liquid and requires an appropriate level of There is a need to distinguish between trades and agreements to be used on the exchange platform and bilaterally. 3 cont. Remaining contract terms The team held a preliminary discussion regarding potential standardisation for the following contract terms. Note, where the team has reached in principle agreement, this is recorded in the ‘Decisions/Views’ column. All - For all that have in principle agreement (as per ‘Decisions/Views’ column), engage in preliminary discussions with respective organisations and wider industry that recommendations are suitable. The team provided in principle agreement, subject to testing, for the following clauses: Default that the items to be decided include what constitutes default, the remedy options, and the time to remedy. Commented that the time periods for remedying financial and defaults appear to already be standard, and the consequences of not remedying are to suspend or terminate. The team discussed the possible outcomes if any of the parties default, as detailed in the annexed table. Ways to facilitate continued access to the capacity if a party was to default were discussed, such as allowing the option for the secondary trader to pay the published reference price to the pipeline operator if the primary shipper were GMRG – add to “parking lot” to revisit at a later stage: Arrangements for defaulting traders that have traded on the exchange platform, noting these are likely to align with the provisions in the Gas Supply Hub Exchange Agreement. Default Recommends the clause includes: Cure period to be 7 days for financial, and 21 days for a non-financial default. The annexed table contains a starting point for the provisions of the agreements.
Receipt and delivery point temperatures and pressures The team agreed that receipt and delivery point pressures and temperatures are technical pipeline requirements that are not appropriate for standardisation. Receipt and delivery point temperatures and pressures The team recommends these be included in a pipeline specific schedule or manual. 8 Confirm in principle agreement of terms The team discussed the lawyer’s potential approach to drafting the terms based on their preliminary views. The drafting of the Operational Transfer Agreement (between pipeline operator and secondary shipper) could then be used to inform the drafting of the Capacity Trading Agreement (between primary and secondary shipper) for any similar terms that have not yet been discussed in that context. 9 Break N/A N/A N/A 10 Project team road map (2) The team discussed the agenda for the next meeting, and agreed to on allocation agreements and receipt and delivery point flexibility. The team noted there are outstanding items including: Additional Operational Transfer Agreement terms (including invoicing and billing, governing laws and tax, jurisdiction based restrictions) which would be discussed further in line with the legal drafting. Outstanding Capacity Trading Agreement (see Agenda Item 8). Agreements associated with the Day Ahead Auction Whether the standards are voluntary or mandatory Application of the terms bilaterally and on the capacity exchange platform. All – contact relevant experts to provide advice on allocation agreements and receipt and delivery point flexibility in the next meeting. GMRG – add the outstanding items to the parking lot. 11 Next meetings Meeting 7 to be a double meeting held face-to-face on
Default Agenda Item 3: following table denotes the options the team discussed to be included in the contract for the contracting parties in the relevant agreements. Defaulting Typical Primary GTA Operational Transfer Agreement Capacity Trading Agreement Pipeline Operator Primary Shipper Pipeline Operator Secondary Shipper Primary Shipper Secondary Shipper Pipeline Operator – no remedy* Unable to remedy Terminate Unable to remedy Terminate Terminate Terminate Pipeline Operator Remedy in specified timeframes Remedied in specified timeframes Remedy in specified timeframes Remedied in specified timeframes No impact No impact Primary Shipper – no remedy Terminate – capacity transferred back to party Unable to remedy On foot – has no cause to terminate the contract with the secondary shipper On foot – but no longer has capacity of primary shipper Unable to remedy - capacity has been transferred back to pipeline operator Terminate – option to seek damages Primary shipper - remedy Remedied in specified timeframes Remedy in specified timeframes No impact No impact Remedy in specified timeframes Remedied in specified timeframes Secondary Shipper – no remedy No impact No impact Terminate Unable to remedy Terminate Unable to remedy Secondary shipper – remedy No impact No impact Remedied in specified timeframes Remedy in specified timeframes Remedied in specified timeframes Remedy in specified timeframes Force Majeure
Agenda Item 3: Party calling force majeure Typical Primary GTA Operational Transfer Agreement Capacity Trading Agreement Pipeline Operator Primary Shipper Pipeline Operator Secondary Shipper Primary Shipper Secondary Shipper Pipeline Operator Calling force majeure Continue to pay 100% under existing standard agreements, some shippers may have negotiated reduced payment for a reduced service. Option to terminate after 12 months Calling force majeure Continue to pay fees and charges as applicable. Option to terminate after 12 months If terminates primary GTA will need to terminate this agreement too. Continue to pay. Terminate after 12 months. Primary Shipper Continues to be paid 100% under existing standard agreements, some shippers may have negotiated reduced payment for a reduced service. Option to terminate after 12 months. Calling force majeure Contract remains on foot. Continue to pay fees and charges as applicable. Calling majeure Terminate 12 months with option to sue the primary shipper for damages. Secondary Shipper No impact No impact N/A - Remains on foot Unable to call force majeure N/A - Remains on foot Unable to call force majeure