to default. It was noted that this could be difficult if the primary shipper is not known to the secondary shipper that has access to the capacity at the time of default. The secondary shipper would be able to approach the pipeline operator for a Primary contract to transport the available capacity. Discussed the role of the exchange platform, prudentials, and the operator of the platform as the market clearer. Discussed the likelihood of these arrangements being required, and that when required, the impact is material. Discussed the interplay between measuring risk and having anonymous trading counterparties. Force majeure Force majeure Noted that events for Recommends the clause force majeure are requires: universal, with a test for Secondary shippers are to force majeure having to pay the primary shipper be passed for a party to for capacity, and any be able to call it-normally applicable charges to the this requires the party’s pipeline operator obligation to be impacted regardless of force by greater than 50%. majeure having been Noted the occurrence of called by any party. partial and prolonged Secondary shippers to force majeure, for not be given the example due to stress provision to call force corrosion cracking. majeure in the Discussed the possibility Operational Transfer of the primary shipper Agreement (between passing through a pipeline operator and reduction in price in secondary shipper) or the good faith if they had Capacity Transfer negotiated this in their Agreement (between primary Gas Transport secondary and primary Agreement. It was shipper). These are concluded that this was detailed in the table likely to introduce annexed. complexity in a liquid market as the product would be inconsistent. Discussed payment requirements if a party was in force majeure, noting current standard agreements require continual payment. The team deemed requiring shippers to continue to pay as an appropriate
to default. It was noted that this could be difficult if the primary shipper is not known to the secondary shipper that has access to the capacity at the time of default. The secondary shipper would be able to approach the pipeline operator for a Primary contract to transport the available capacity. Discussed the role of the exchange platform, prudentials, and the operator of the platform as the market clearer. Discussed the likelihood of these arrangements being required, and that when required, the impact is material. Discussed the interplay between measuring risk and having anonymous trading counterparties. Force majeure Noted that events for force majeure are universal, with a test for force majeure having to be passed for a party to be able to call it-normally this requires the party’s obligation to be impacted by greater than 50%. Noted the occurrence of partial and prolonged force majeure, for example due to stress corrosion cracking. Discussed the possibility of the primary shipper passing through a reduction in price in good faith if they had negotiated this in their primary Gas Transport Agreement. It was concluded that this was likely to introduce complexity in a liquid market as the product would be inconsistent. Discussed payment requirements if a party was in force majeure, noting current standard agreements require continual payment. The team deemed requiring shippers to continue to pay as an appropriate Force majeure Recommends the clause requires: Secondary shippers are to pay the primary shipper for capacity, and any applicable charges to the pipeline operator regardless of force majeure having been called by any party. Secondary shippers to not be given the provision to call force majeure in the Operational Transfer Agreement (between pipeline operator and secondary shipper) or the Capacity Transfer Agreement (between secondary and primary shipper). These are detailed in the table annexed.