TERMS

TERMS

We believe the trend towards smaller field developments in the North Sea requires quicker and simpler commercial processes. Our Standard Terms help in reducing the need for extended negotiation to access infrastructure and provide greater transparency in the marketplace.

Please note that existing Transportation and Processing Agreements may cover incremental production from existing fields and their satellite field developments in which case these terms may not apply to such additional liquids.

The information contained in this website is a summary only. The outlined terms are not intended to be an offer capable of acceptance or to create any legally binding obligation on any party.

INEOS's and Customer's Obligations


The basis for the parties obligations to each other will normally be as follows:

INEOS undertakes to:

  • Transport the customer's Pipeline Liquids through FPS
  • Process the customer's Pipeline Liquids at the Kinneil Terminal
  • Allocate Forties Blend in accordance with the FPS Allocation Procedure
  • Store temporarily the resultant Forties Blend at Dalmeny
  • Deliver the Forties Blend at Hound Point Terminal
  • Deliver the Raw Gas at the agreed Redelivery Point
  • We expect FPS to continue in operation until at least 2030


The Customer undertakes to:

  • Tender for delivery at the Transfer Point agreed quantity of customer's Pipeline Liquids
  • Comply with the agreed specifications for customers Pipeline Liquids
  • Comply with the operational requirements of FPS (including the System Operating Procedures)
  • Provide notification and information to INEOS as INEOS may require to carry out its obligations
  • Accept delivery of its entitlement of Forties Blend and Raw Gas, at the agreed redelivery points
  • Pay the tariff


The customer is responsible for the work and cost required to gain access to FPS at the Transfer Point, and for ensuring that any access meets with FPS requirements.

Liquid Specification and Composition


In order to maintain the availability and integrity of our pipeline system and the quality of Forties Blend, limitations apply to the composition and specification of pipeline liquids. The principal specification limits applicable to the Standard Terms include:

Carbon Dioxide Maximum 0.2 mole %
Carbonyl Sulphide Maximum 0.02 ppm weight
Hydrogen Sulphide Maximum 0.1 ppm weight as hydrogen sulphide
Marcaptans Maximum 0.1 ppm weught as sulphur of volatile mercaptans which separate into Raw Gas under Kinneil operating conditions
Mercury Maximum 0.35 ng/g weight as volatile organic or inorganic mercury which separates into Raw Gas under Kinneil operating conditions
Nitrogen Maximum 0.2 mole % weight
Acidity Maximum TAN 0.30 mg KOH/g customer Pipeline Liquid
Water & Sediment Maximum 2% by volume
True Vapour Pressure Maximum 125 psig at 60°F
Viscosity Maximum 15 Centistokes at 4°C

We are ready to discuss acceptance of pipeline liquids falling outside these limits or with other non-hydrocarbon components.

Commercial Terms


All new fields that meet the liquid specification above will be subject to the current standard FPS tariff. For fields that are subject to the Tax-Exempt Tariffing Receipts (TETR) legislation, the base tariff is £1/bbl (referenced to 2004). For fields not subject to TETR, the base tariff is £1.55/bbl (referenced to 2004).

In both cases, indexation of the tariff from 2004 will be based on a basket of indices that represent the FPS cost base. This basket is made up of 50% private sector earnings, 15% High Sulphur Fuel Oil, 15% fabricated metal products, 10% retail price index and 10% electricity price. This indexation methodology provides that the tariff level will rise and fall in line with the FPS cost base. This means that FPS customers will benefit from times when the cost base is low. It also ensures that INEOS's revenues increase in times when the cost base rises, in order that INEOS is able to continue to spend the money required to maintain and operate FPS safely and reliably.

Subject to certain reliefs, send or pay will be charged on 85% of the FMQ (Firm Maximum Quantity) profile (see below).

The above tariff and terms are standardised. The acceptance of liquids depends on meeting the specification and composition criteria, and is subject to the approval of INEOS.

Capacity Booking Process


To meet the future throughput requirements of all customers, both new and existing, it is necessary to manage and optimize capacity within the FPS.

In addition to providing customers with certainty of future capacity, successful management of capacity ensures the FPS is able to maintain high levels of service and availability.

The FPS manages capacity using a booking mechanism as illustrated in the diagram below:

NB: The Unrestricted Booking Range only applies to fields with maximum production of less than 30 mbd.

Each contract will specify a Peak Entitlement that will govern the maximum allowable booked capacity in the system.

The Peak Entitlement is set at the time of contract execution to frame the level of capacity and service to which the agreed tariff and terms are applicable.

Each contract will contain an FMQ profile, representing the field owners' bona-fide life of field view of production at the time of contract execution. Each field shall be granted capacity rights in Forties System equal to the FMQ profile.

The FMQ may be changed by the field owners annually on a year ahead basis. Additionally, fields with maximum production of less than 30 mbd may change their FMQ quarterly on a two quarters ahead basis. This flexibility enables small fields to manage unexpected reservoir performance.

Each field shall be entitled to make unrestricted downwards revisions to its FMQ. In addition, fields with maximum production of less than 30 mbd shall be entitled to make unrestricted revisions to their FMQ profiles up to the Unrestricted Booking Range, and up to the Peak Entitlement subject to there being sufficient uncontracted capacity available within the FPS. This additional flexibility further enables small fields to manage unexpected reservoir performance.

The FMQ profile may not be increased above the Peak Entitlement.

All FMQ profiles should represent the field owners' bona-fide view of production for the life of field.

Additional & Spot Quantities


INEOS will aim to accept the request by the customer's Operator on behalf of the customer's Group for the delivery of nominated Additional Quantities.

Where there is accessible capacity that is not being utilised on a given day, and a Customer has a demand that will take it above any contractual entitlements, then FPS may allow a field to export above its contractual limit. Any volumes above the contractual entitlement that are awarded on the day are known as Spot Quantities.

Spot Quantities are accepted and controlled by the Forties Pipeline Control Centre on a daily basis.

Additional and Spot Quantities will be subject to a 10% tariff uplift. 

Allocation Procedure


The quantity of Forties Blend and Raw Gas that each customer shall be entitled to have redelivered is calculated by the Forties System Allocation and Valuation system. This method of allocation and value adjustment is based on process simulation and on the principle that 'value in, equals value out'. The system has been tried, tested and well understood in the industry and is viewed as being fair and equitable.

Where the customers Pipeline Liquids are to be measured and sampled individually to a fiscal standard, the customer entitlement to Forties Blend and Raw Gas shall be performed on a primary basis.

Where the customers Pipeline Liquids are to be measured to a fiscal standard as part of a commingled stream, allocation will be performed on a secondary basis.

By default, all value adjustment is performed at the primary level, with secondary allocation allocating on a volume basis only.

As an additional service and for an additional charge, customers may request the FPS to perform secondary allocation adjusted for both value and volume.