SHELL GENERAL PROVISIONS FOR
The purpose of this document (General Provisions) is to establish the standard terms and conditions to be incorporated by reference with the specific terms and conditions stipulated in a purchase, sale or exchange contract (Contract). In the event of any inconsistency between these General Provisions and the specific terms and conditions of the Contract, the specific terms and conditions of the Contract shall govern. These General Provisions taken together with the provisions of the Contract shall constitute the Agreement between the parties concerning the subject matter hereof.
A. Measurement
and Tests:
All measurements hereunder shall be made from static tank gauges on 100 percent
tank table basis or by positive displacement meters. All measurements and tests shall be made in accordance with the
latest ASTM or ASME-API (Petroleum PD Meter Code) published methods then in effect,
whichever apply. Volume and gravity
shall be adjusted to 60 degrees Fahrenheit by the use of Table 6A and 5A of the
Petroleum Measurement Tables ASTM Designation D1250 in their latest
revision. The crude oil delivered
hereunder shall be marketable and acceptable in the applicable common or
segregated stream of the carriers involved but not to exceed 1% S&W. Full deduction for all free water and
S&W content shall be made according to the API/ASTM Standard Method then in
effect. Either party shall have the
right to have a representative witness all gauges, tests and measurements. In the absence of the other party's
representative, such gauges, tests and measurements shall be deemed to be
correct.
B. Warranty:
The Seller warrants good title to all crude oil delivered hereunder and
warrants that such crude oil shall be free from all claims of royalty owners,
liens, encumbrances and that all applicable foreign, federal, state and local
taxes have been paid.
Seller further warrants that the crude oil delivered shall not be
contaminated by chemicals foreign to virgin crude oil, including, but not
limited to, chlorinated and/or oxygenated hydrocarbons and lead. Buyer shall have the right, without
prejudice to any other remedy available to Buyer, to reject and return to
Seller any quantities of crude oil, which are found to be so contaminated, even
after delivery to Buyer.
C. Rules and Regulations: The terms, provisions and activities
undertaken pursuant to this Agreement shall be subject to all applicable laws,
orders and regulations of all relevant governmental authorities. If at any time a provision hereof violates
any such applicable laws, orders or regulations, such provision shall be voided
and the remainder of the Agreement shall continue in full force and effect
unless terminated by either party upon giving written notice to the other party
hereto. If applicable, the parties
hereto agree to comply with all provisions (as amended) of the Equal
Opportunity Clause prescribed in 41 C.F.R. 60-1.4; the Affirmative Action
Clause for disabled veterans and veterans of the Vietnam Era prescribed in 41
C.F.R. 60-250.4; the Affirmative Action Clause for Handicapped Workers
prescribed in 41 C.F.R. 60-741.4; 48 C.F.R. Chapter 1 Subpart 19.7 regarding
Small Business and Small Disadvantaged Business Concerns; 48 C.F.R. Chapter 1
Subpart 20.3 regarding Utilization of Labor Surplus Area Concerns; Executive
Order 12138 and regulations thereunder regarding subcontracts to women-owned
business concerns; Affirmative Action Complicance Program (41 C.F.R. 60-1.40);
annually file SF-100 Employer Information Report (41 C.F.R. 60-1.7); 41 C.F.R.
60-1.8 prohibiting segregated facilities; and the Fair Labor Standards Act of
1938 as amended, all of which are incorporated in this Agreement by reference.
D. Hazard Communication: Seller shall provide its Material
Safety Data Sheet ("MSDS") to Buyer.
Buyer acknowledges the hazards and risks in handling and using crude
oil. Buyer shall read the MSDS and
advise its employees, its affiliates, and third parties, who may purchase or
come into contact with such crude oil, about the hazards of crude oil, as well
as the precautionary procedures for handling said crude oil, which are set
forth in such MSDS and any supplementary MSDS or written warning(s) which
Seller may provide to Buyer from time to time.
E. Force Majeure: Except for payment due hereunder,
either party hereto shall be relieved from liability for failure to perform
hereunder for the duration and to the extent such failure is occasioned by war,
riots, insurrections, fire, explosions, sabotage, strikes, and other labor or
industrial disturbances, acts of God or the elements, governmental laws,
regulations, or requests, acts in furtherance of the International Energy
Program, disruption or breakdown of production or transportation facilities,
delays of pipeline carrier in receiving and delivering crude oil tendered, or
by any other cause, whether similar or not, reasonably beyond the control of
such party. Any such failures to
perform shall be remedied with all reasonable dispatch, but neither party shall
be required to supply substitute quantities from other sources of supply. Failure to perform due to events of Force
Majeure shall not extend the term of this Agreement.
Notwithstanding the above, and in the event that the Agreement is an
associated purchase/sale, or exchange of crude oil, the parties shall have the
rights and obligations described below in the circumstances described below:
(1) If, because of Force Majeure, the party
declaring Force Majeure (the "Declaring Party") is unable to deliver
part or all of the quantity of crude oil which the Declaring Party is obligated
to deliver under the Agreement or associated contract, the other party (the
"Exchange Partner") shall have the right but not the obligation to
reduce its deliveries of crude oil under the same Agreement or associated
contract by an amount not to exceed the number of barrels of crude oil that the
Declaring Party fails to deliver.
(2) If, because of Force Majeure, the Declaring
Party is unable to take delivery of part or all of the quantity of crude oil to
be delivered by the Exchange Partner under the Agreement or associated
contract, the Exchange Partner shall have the right but not the obligation to
reduce its receipts of crude oil under the same Agreement or associated
contract by an amount not to exceed the number of barrels of crude oil that the
Declaring Party fails to take delivery of.
F. Payment:
Unless otherwise specified in the Contract, Buyer agrees to make payment
against Seller's invoice for the crude oil purchased hereunder to a bank
designated by Seller in U.S. dollars by wire transfer in immediately available
funds. Unless otherwise specified in
the Contract, payment will be due on or before the 20th of the month following
the month of delivery. If payment due
date is on a Saturday or New York bank holiday other than Monday, payment shall
be due on the preceding New York banking day.
If payment due date is on a Sunday or a Monday New York bank holiday,
payment shall be due on the succeeding New York banking day.
Payment shall be deemed to be made on the date good funds are credited
to Seller's account at Seller's designated bank.
In the event that Buyer fails to make any payment when due, Seller shall
have the right to charge interest on the amount of the overdue payment at a per
annum rate which shall be two percentage points higher than the published prime
lending rate of Chase Manhattan Bank of New York on the date payment was due, but
not to exceed the maximum rate permitted by law.
G. Financial Responsibility: Notwithstanding anything to the
contrary in this Agreement, should Seller reasonably believe it necessary to
assure payment, Seller may at any time require, by written notice to Buyer,
advance cash payment or satisfactory security in the form of a Letter or
Letters of Credit at Buyer's expense in a form and from a bank acceptable to
Seller to cover any or all deliveries of crude oil. If Buyer does not provide the Letter of Credit on or before the
date specified in Seller's notice under this section, Seller or Buyer may
terminate this Agreement forthwith.
However, if a Letter of Credit is required under the Contract and Buyer
does not provide same, then Seller only may terminate this Agreement
forthwith. In no event shall Seller be
obligated to schedule or complete delivery of the crude oil until said Letter
of Credit is found acceptable to Seller.
Each party may offset any payments
or deliveries due to the other party under this or any other agreement between
the parties.
If a party to this Agreement (the "Defaulting Party") should
(1) become the subject of bankruptcy or other insolvency proceedings, or
proceedings for the appointment of a receiver, trustee, or similar official,
(2) become generally unable to pay its debts as they become due, or (3) make a
general assignment for the benefit of creditors, the other party to this
Agreement may immediately terminate this Agreement effective upon the
Defaulting Party’s receipt of written notice of termination.
Termination of this Agreement shall be without prejudice to any right of
action or claim accrued on or before the date of termination under this
Agreement or applicable law.
H. Equal Daily Deliveries: For pricing purposes only, unless
otherwise specified in the Contract, all crude oil delivered hereunder during
any calendar month shall be considered to have been delivered in equal daily
quantities during such month.
I. Exchange Balancing: If volumes are exchanged, each party
shall be responsible for maintaining the exchange in balance on a
month-to-month basis, as near as pipeline or other transportation conditions
will permit. In all events upon
termination of this Agreement and after all monetary obligations under this
Agreement have been satisfied, any volume imbalance existing at the conclusion
of this Agreement of less than 1,000 barrels will be declared in balance. Any volume imbalance of 1,000 barrels or
more, limited to the total contract volume, will be settled by the
underdelivering party making delivery of the total volume imbalance in
accordance with the delivery provisions of this Agreement applicable to the
underdelivering party, unless mutually agreed to the contrary. The request to schedule all volume
imbalances must be confirmed in writing by one party or both parties. Volume imbalances confirmed by the 20th of
the month shall be delivered during the calendar month after the volume
imbalance is confirmed. Volume
imbalances confirmed after the 20th of the month shall be delivered during the
second calendar month after the volume imbalance is confirmed.
J. Delivery, Title, and Risk of
Loss:
Delivery, title, and risk of loss of the crude oil delivered hereunder shall
pass from Seller to Buyer as follows: For
lease delivery locations, delivery of the crude oil to the Buyer shall be
effected as the crude oil passes the last permanent delivery flange and/or
meter connecting the Seller's lease/unit storage tanks or processing facilities
to the Buyer's carrier. Title to and
risk of loss of the crude oil shall pass from Seller to Buyer at the point of
delivery.
For delivery locations other than lease/unit delivery locations,
delivery of the crude oil to the Buyer shall be effected as the crude oil
passes the last permanent delivery flange and/or meter connecting the delivery
facility designated by the Seller to the Buyer's carrier. If delivery is by in-line transfer, delivery
of the crude oil to the Buyer shall be effected at the particular pipeline
facility designated in this Agreement.
Title to and risk of loss of the crude oil shall pass from the Seller to
the Buyer upon delivery.
K. Term: Unless otherwise specified in the
Contract, delivery months begin at 7:00 a.m. on the first day of the calendar
month and end at 7:00 a.m. on the first day of the following calendar month.
L. Governing Law: This Agreement and any disputes
arising hereunder shall be governed by the laws of the State of Texas.
M. Limitation of Liability: Neither party
shall be liable to the other party for loss of profits or indirect, special,
exemplary or punitive, or consequential damages.
N. Necessary Documents: Upon request, each party agrees to
furnish all substantiating documents incident to the transaction, including a
Delivery Ticket for each volume delivered and an invoice for any month in which
the sums are due.
O. Waiver:
No waiver by either party regarding the performance of the other party
under any of the provisions of this Agreement shall be construed as a waiver of
any subsequent performance under the same or any other provisions.
P. Assignment:
This Agreement is freely assignable by Seller. However, notice shall be
given to Buyer within thirty days of assignment. The Buyer shall not assign
this Agreement without the express written consent of Seller and only to a
financially solvent party.
Q. Entirety of Agreement: The Contract and these General
Provisions contain the entire agreement of the parties; there are no other
promises, representations or warranties.
Any modification of this Agreement shall be by written instrument. Any conflict between the Contract and these
General Provisions shall be resolved in favor of the Contract. The section headings are for convenience
only and shall not limit or change the subject matter of this Agreement.
R. Definitions:
When used in this Agreement, the terms listed below have the following
meanings:
"API"
means the American Petroleum Institute.
"ASME"
means the American Society of Mechanical Engineers.
"ASTM"
means the American Society for Testing Materials.
"Barrel"
means 42 U.S. gallons of 231 cubic inches per gallon corrected to 60 degrees
Fahrenheit.
"Carrier"
means a pipeline, barge, truck, or other suitable transporter of crude oil.
"Crude
Oil" means crude oil or condensate, as appropriate.
"Day,"
"month," and "year" mean, respectively, calendar day,
calendar month, and calendar year, unless otherwise specified.
"Delivery Ticket" means a
shipping/loading document or documents stating the type and quality of crude
oil delivered, the volume delivered and method of measurement, the corrected
specific gravity, temperature, and S&W content.
"Invoice" means a statement
setting forth at least the following information: The date(s) of delivery under
the transaction; the location(s) of delivery; the volume(s); price(s); the
specific gravity and gravity adjustments to the price(s) (where applicable);
and the term(s) of payment.
"S&W"
means sediment and water.