Asset Management Agreement Pipeline


The year 1992 in Order No The Commission`s prohibition on buy/sell operations prohibits a holder of intergovernmental pipeline capacity from purchasing gas from a seller, to transport gas on an intergovernmental pipeline and then resell the gas to the vendor after leaving the pipeline – transactions that would allow a capacity holder to circumvent capacity release requirements by allowing another party to effectively use its pipeline capacity. While such sales are prohibited, the Commission granted in Order 712 “an exemption from the prohibition on purchase/sale for AMA that may benefit from the exemption from tenders and tenders, but only for the quantities of gas delivered to the liberating shipper.” The Commission found that it was acceptable for a gas buyer to use an asset manager to manage its pipeline capacity while maintaining direct responsibility to purchase gas, even if these purchases were to be sold to the asset manager who manages the pipeline`s capacity, which could be contrary to the purchase/sale prohibition. However, in Regulation 712, the Commission did not directly specify whether AAAs would not be exempt from the purchase/sale ban in a similar manner. FERC has banned so-called buy/sell transactions as part of the pipeline restructuring, which are mandatory under Regulation 636. (3) In implementing the new capacity release program on that date, FERC prohibited forward-looking buy/sale agreements. (4) In 2008, FERC adopted Decision 712, which exempts sales and sales transactions under an asset management agreement from the general prohibition, but only with respect to the quantities of gas delivered to the liberating shipper. (5) On 15 October 2015, the Federal Energy Regulatory Commission (FERC or “Commission”) adopted a regulation specifying the extent to which gas asset management agreements (AMA) were an exception to the Commission`s ban on purchase/sale transactions. In response to a request from Rice Energy Marketing, LLC, the Commission clarified that the exemption from the prohibition on purchase/sale transactions for certain transactions with asset managers applies to both AMA`s “delivery” and amAs “delivery,” although the Commission has previously only referred to the exemption as part of AMA`s delivery. The October 15 order states that these transactions in the asset management agreements on the supply side are certainly buy/sell agreements, but they are not prohibited purchase/sale agreements. In its October 15 order, FERC confirmed that Order 712 exempted delivery management agreements from the prohibition on sale and sale, as exempt transactions did not constitute the type of sales transactions prohibited after Order 636. Ferc then clarified that the sales/sale prohibition did not apply, in the same way, to the quantities of gas that the asset manager acquires from its shipper as part of an asset management agreement on the supply side and then resells them to that shipper.

FERC submitted that this was not a matter of evading the requirements of the capacity release rules, because “the passenger F shipper does not release an unreserved capacity, but capabilities that continue to be used for the same purpose for which the F-traveller shipper originally acquired it in the delivery agreement – to transport its natural gas to the market.” AMAs are contractual relationships in which an “asset manager” agrees to manage another party`s gas supply and supply agreements, including its pipeline capacity.

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