Leadership for Energy Automated Processing

Leadership for Energy Automated Processing

May 27th, 2008CAPP PresentationCrude Oil Committee – Calgary

www.energyleap.org

May 27th, 2008CAPP PresentationCrude Oil Committee – Calgary

www.energyleap.org

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ObjectiveObjective

The objective of thispresentation is to provide mutual

awareness between LEAP and CAPP.

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What is LEAP?What is LEAP?

• LEAP - Leadership in Energy Automation and Processing• A non-profit organization• Focus on Energy Trading• Global scope• Comprised of industry working groups to

improve energy trading• Executive committee and by-laws

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MembersMembers•Addax BV Curacao•Arcadia•Barclays Bank•BP•Camin Cargo•Cargill International SA •Chevron•Citibank N.A.•Deloitte•Depository Trust & Clearing Corporation•Deutsche Bank •ESS•Glencore Ltd.•Hess Corporation•Intercontinental Exchange•Intertek USA Inc.•Inspectorate•J. Aron & Company

•JP Morgan Chase•Koch Supply & Trading LP•Mercuria Energy Holding BV•Morgan Stanley•Nexen Inc.•PMI Comercio Internacional S.A. de C.V.•Saracen Merchant Energy LP•Sempra Energy Trading•SGS Group Management SA•Shell Trading US•StatoilHydro ASA•Sungard Consulting•Totsa Total Oil Trading SA•Transport4

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Mission StatementMission Statement

Mission Statement: to promote efficient and reliable transaction

processing within the energy trading industry by means of

automation and standardization.

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Energy Trading - InitiativesEnergy Trading - Initiatives

• Promote data automation and standards

• Fill the gaps in automation and standardization which includes contracts

• Develop contract standards to allow for electronic confirmation and electronic settlement of trades

• Work with system vendors on a neutral basis to ensure they use the same data standards

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Standard ContractsStandard Contracts

• Release V2.0 of the LEAP Master Agreement for Crude Oil and Refined Products (U.S.) in Nov., 2007

• International Swap and Derivatives Association (ISDA) is working with LEAP to publish an Oil Annex

• Canadian sub-committee will be releasing the Canadian Addendum to V2.0 of the LEAP Master Agreement in June, 2008

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Benefits of Standard ContractsBenefits of Standard Contracts

• Independent and neutral contract• Industry standard reference point

(95%) standard terms and conditions• Able to customize (5%) if required • Significantly reduces time required to

negotiate contracts• Reduces legal costs associated• Allows electronic confirmation of

energy trades and operational excellence

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Benefits of Electronic Confirmation

Benefits of Electronic Confirmation

• Electronic matching of deals identifies trade capture error rates (10 – 20%*)

• Firm acceptance of deal terms under agreed terms and conditions

• Faster acceptance, facilitates audits• Eliminates manual processes• Reduces paper flow time and costs• 4 companies using eConfirm in the

U.S. for physical crude oil trades*Source: ISDA Benchmark Study 2007

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Error RatesError Rates

*Source: ISDA Benchmark Study 2007

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Canadian Sub-CommitteeCanadian Sub-Committee

Canadian Sub-Committee Members include:

• Nexen, BP, Shell, Chevron, J Aron/GS, Morgan Stanley, Total, Barclays, Mercuria

• The Canadian Addendum appends to the LEAP Master Agreement to include Canadian terms, i.e. Alberta law, credit provisions (CCAA, BIA), tax, currency, exchange rates

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How it worksHow it works

• The Canadian Addendum appends to the LEAP Master Agreement if executed

• One set of Special Provisions allows companies to customize these terms

• The master contract terms then apply to applicable transactions with the parties

• Without eConfirm there are still benefits of shorter contracts that bind the parties under fully agreed terms

• Schedule J of ICE eConfirm allows parties to confirm electronically

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More About LEAPMore About LEAP

Other Global LEAP Initiatives:• Contract Committee - Rotterdam

Barge Agreement (North West Europe)

• Electronic Bills of Lading (Marine)• Certificates Quantity & Quality

(Marine)• Reference Data• Scheduling Initiatives (Transport4)• Settlement Committee

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MembershipMembership

• Membership is not required to use the LEAP Master Agreement, but it is required to participate in committees

Membership Types:• Full Membership (board members)• Regular Membership (committees)• Service Membership (vendors)• Associate Membership (UK - Energy

Institute)

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CONTACT INFORMATIONCONTACT INFORMATION

•Cdn. Addendum:

Karen Mikkelborg403.699.4206Karen_Mikkelborg@nexeninc.com

•LEAP Master Kevin Jandora914.225.4509Kevin.Jandora@morganstanley.com

Mary Dortenzio203.328.3175Mary.Dortenzio@glencore-us.com