Tools

MSDS-TDS

NGL - Risk Management Tool: Pre-Buy

A Pre-Buy contract allows a customer to arrange a fixed-price supply contract for a fixed volume to be delivered to a specific location or terminal on fixed or variable delivery dates.

PRE-BUY - Fixed Delivery Date

Delivery period selected (1 month - 12 months)
Monthly volumes specified for each month of the delivery period
Deposit due at execution of the pre-buy contract
Balance of purchase amount due according to remittance schedule outlined in the base purchase contract in place
Other incidental charges (i.e. tank car charges, PERC, etc) invoiced upon delivery of product

PRE-BUY - Variable Delivery Date

Delivery period selected (1 month - 12 months)
Monthly volumes NOT specified but subject to the maximum volume previously specified under the base purchase contract allocation for the month
Deposit due at execution of pre-buy contract
Balance of purchase amount due according to remittance schedule outlined in the base purchase contract in place
Other incidental charges (i.e. tank car charges, PERC, etc) invoiced upon delivery of product

Both pre-buy choices are volume and delivery-period sensitive. Customers are required to take delivery of the product in the volume and within the delivery periods agreed. Additional fees and penalties may be levied for failure to take delivery of contracted volumes within the agreed delivery periods.

General Requirements/Conditions:

Customer has an executed base purchase contract (based upon postings, perhaps) at the selected terminal/location.
Parties agree to a pre-buy price for the desired volume.

Other Considerations

There are certain risks inherent in the pre-buy contract. These include, but are not limited to, being required to take delivery of product in the future at fixed prices that may be significantly higher than the spot prices prevailing at the time of delivery.