BP’s 2015 General Terms & Conditions For The Sale And Purchase Of Crude Oil And Petroleum Products: Key Changes To Be Aware Of

BP Oil International Limited (BP) recently published the 2015 edition of its General Terms & Conditions for Sales and Purchases of Crude Oil and Petroleum Products (GTCs). The previous GTCs were published in 2007, albeit with at least one update since then covering barge deliveries.

BP's GTCs continue to be widely used in the crude oil and products trading markets. An understanding of the 2015 GTCs is therefore critical to producers, consumers and traders of crude oil and products alike.

The 2015 GTCs now cover sales and purchases of both crude oil and products in a single document. In many instances, the 2015 GTCs reflect changes in market practice that have been widely adopted since the 2007 GTCs (for example, references to Incoterms® 2000 have been replaced with Incoterms® 2010), but the new GTCs also contain other important changes, including to key issues such as operational procedures, payment, events of default and termination, dispute resolution and time limits for claims.

The oil markets continue to witness a trend of convergence between the contract terms used by market participants for the sale and purchase of crude oil and products. Standardisation of contract terms brings many benefits to the market, including the elimination of the 'basis risk' for traders that would otherwise result from buying and selling on different contract terms. Such is the level of convergence that for some time...