Annex VIII

Guidance on reporting of LNG supply contracts under REMIT

1 Scope and purpose

The primary purpose of transaction reporting under REMIT is to enable ACER and the NRAs to efficiently and effectively monitor trading activity in the EU wholesale energy market to detect and prevent suspected market abuse in order to fulfil the goal of increased integrity and transparency of wholesale energy markets.

As specified in ACER’s Questions and Answers on REMIT (‘Q&As on REMIT’)^[1], contracts for the supply of LNG with delivery in the Union are wholesale energy contracts pursuant to Article 2(4)(a) of Regulation 1227/2011 (‘REMIT’).

Annex VIII to the Transaction Reporting User Manual (‘TRUM’) provides guidance to market participants on the transaction reporting requirements of supply contracts related to liquefied natural gas (‘LNG’) under REMIT.

The guidance provided herein is mainly based on publicly available guidance that has previously been consulted with relevant stakeholders from the industry, such as the TRUM and its Annexes, the Frequently Asked Questions on REMIT transaction reporting (‘FAQ document’), and to a limited extent the Guidance on LNG market data reporting (which specifies data reporting requirements under Regulation 2022/2576)^[2].

With this Annex, ACER aims to summarise and further clarify the information provided in the TRUM and the FAQ document on the reporting of standard and non-standard contracts from the perspective of LNG related transactions. These guidance documents should therefore be consulted together. Practical examples of supply contracts related to LNG are available in Annex II to TRUM.

This annex has been compiled with the underlying assumption that its readers are familiar with the general logic of reporting standard and non-standard contracts under REMIT. It is therefore imperative that, in case of any doubt, market participants carefully consult the respective chapters of the TRUM first, such as Chapter 3.1.5 Definition of standard and non-standard contract, in order to understand the reporting requirements of standard and, in case of LNG especially, non-standard supply contracts under REMIT.

This annex first discusses the type of contracts typical for LNG traded bilaterally (Chapter 2) and LNG standard contracts traded on organised market places (Chapter 3). These chapters provide the definitions for these different types of contracts, together with guidance on how to report them under REMIT. In Chapter 4, the more specific data reporting requirements are clarified in relation to the Table 1 and Table 2 data fields^[3] to which reporting parties should pay special attention when reporting details of an LNG transaction under REMIT. Chapter 5 provides information on the type of transactions and contracts related to LNG that are outside the scope of reporting.  

2 Contracts for the supply of LNG traded bilaterally

Contracts for the supply of LNG may have different delivery terms for the timing and location of the delivery that play a key role in determining whether the contract is reportable under REMIT, and if so, how and at what point in time. This chapter aims to describe different bilateral trading scenarios related to LNG and clarify their REMIT reporting aspects.

Most of the contracts for the delivery of liquefied natural gas at EU LNG terminals are concluded bilaterally and are therefore considered non-standard contracts to be reported on a T+1 month basis.

In general, the reporting of non-standard contracts for the supply of LNG traded bilaterally should not be different from any other non-standard contracts for the supply of natural gas, expect for the information on the delivery point. A contract for the supply of natural gas defines the delivery point or zone at a balancing area or at the interconnection point, while the contract for the supply of LNG shall identify the LNG terminal (identified with an EIC W code) as the delivery point. The EIC code of a LNG terminal shall be included in ACER’s List of Accepted EICs available in Annex VI to the TRUM.

Contracts for the supply of LNG (i.e. importation and offloading) at or after the entry flange (that connect the LNG vessel to the LNG terminal) of an EU LNG regasification terminal should be reported by both parties and the EIC W code for the LNG facility should be used. Market participants shall note that in ACER’s view, REMIT does not distinguish between the physical delivery of LNG into the EU and the transfer of title to the LNG.

In addition, contracts for the supply of LNG within LNG facilities are also considered reportable contracts. For instance, when market participant A sells gas to market participant B within an LNG facility, transferring the ownership of the gas, this is a reportable contract.

In ACER’s view, contracts that do not specify any (fixed or potential) EU delivery the time of the agreement between the counterparties are not reportable at that point in time under REMIT. However, the contract/individual cargo deliveries become reportable upon the decision to deliver the LNG into any EU LNG terminal. More information on the REMIT reporting of different trading scenarios is available in the following chapters.

2.1.  Type of contracts typical for LNG trading

In this chapter, the types of contracts typical for LNG trading concluded bilaterally are described, as well as the related REMIT reporting aspects.

• Master agreements

Master agreements (often referred to as ‘framework agreements’) are agreements that only set out the rules for future trading activities for the signing parties, but do not specify any legal obligation to any of the parties to deliver/offtake LNG.

Examples: EFET Master Agreement or an LNG Master Sale and Purchasing Agreement (LNG MSPA)

On the basis of such master agreements, individual contracts can be concluded between counterparties. Individual contracts are considered binding and define the economic and commercial terms of the contract (either by fixing or specifying the conditions for fixing the price and/or quantity).

Depending on their complexity and the potential optionality clauses included, individual contracts can be typically of two types: spot-type contracts or portfolio-type contracts.

• Individual contracts: Spot-type

Spot-type contracts are binding agreements between the counterparties to buy or sell LNG, specifying the economic, commercial and delivery terms of the contract. The agreed terms encompass the following:

- fixed price (which could be an outright price, or set by an index or a differential from an index, or expressed as a formula);

- fixed quantity (or potentially including some defined volume tolerance, i.e. defined as min-max);

- fixed delivery windows (potentially including the shipping operational tolerance); and

- defined or undefined delivery point(s) depending on the terms of delivery specified in the contract, i.e. delivery-ex-ship (‘DES’) or free on board (‘FOB’)^[4].

Under spot-type contracts, in order to fulfil their contractual obligation to buy and sell LNG, no further executions need to be concluded between the counterparties to agree on the terms of the actual deliveries. The delivery obligation may cover a single-cargo or fixed number of cargos. 

Important: in the context of spot-type contracts, the term ‘spot’ shall not be understood as a reference to the close proximity of the delivery window of the cargo(s). The delivery window is specified in the spot-type contract, but it does not necessarily refer to a ‘near term’ (or ‘spot’) delivery, meaning that the agreed delivery is to be executed at a specified, usually future point in time (i.e. several months after the agreement).

Example: Counterparties enter into a deal to purchase 3m MMBtu of LNG for USD 7 at an LNG terminal located in an EU country. Upon delivery, the final amount discharged from the ship and invoiced for is 2.95m MMBtu at USD 7.

With regard to the above scenario, for a fixed-price purchase of physical liquefied natural gas at a specific delivery point, the final quantity unloaded off a ship and paid for is unlikely to be the same quantity as agreed at the contractual stage due to several factors, such as boil off, regasification and other line losses. In such cases, these contracts should be reported under Table 1 as bilateral contracts (‘BILCONTRACT’) as at the time of the transaction the intention of both counterparties is to deliver a fixed volume at a fixed price. Any changes between the contractual volume and the final delivery volume which are outside the operational tolerances should be reported as a lifecycle event with Data Field (58) Action type ‘M’ for Modify. There is no intent from the counterparties to deliver an amount different from what was originally in the contract, The change in the delivery volume is a result of the nature of the product being traded and not a business decision to modify the agreed quantity (i.e. it is not required to early terminate the contract and report it as new with the modified quantity).

In case of transactions that have been already reported to ACER as BILCONTRACT in Table 1 but later there is a decision to divert the cargo from an EU terminal to another EU terminal, this change represents the modification of the transaction to be reported with Action type ‘M’. In case the cargo is diverted to a destination outside the EU destination/not known by the seller, the original transaction is to be cancelled with Action type ‘C’. In both cases the timestamp of the modified/cancelled transaction shall represent the time of the agreement on the cargo diversion.

If the transaction (contract) has been reported as a non-standard contract in Table 2 with a single or multiple EU delivery points, but later there is a decision to deliver the cargo to another EU terminal not listed in the original Table 2 report, the Table 2 report needs to be modified with Action type ‘M’ by adding the additional EU terminal to Data field (41) Delivery point or zone.

• Individual contracts: Portfolio-type contracts and the related executions  

Portfolio-type contracts shall not be considered the same as the above-mentioned master agreements. Portfolio-type contracts are defined as short-, mid- or long-term binding agreements between the counterparties, typically including:

• predefined pricing formulas (typically expressed as complex price formula);
• predefined (but not necessarily fully fixed) quantities or number of cargos to be delivered under the portfolio; and/or
• other flexibility and optionality clauses.

Under portfolio-type contracts, the counterparties subsequently enter into executions to fulfil their delivery obligation.

Executions are agreed between the counterparties (often referred to as ‘nominations’ or ‘programmes’) in order to define the terms of the execution of particular deliveries in order to fulfil their contractual obligation to buy and sell LNG under an existing Portfolio-type contract. Executions shall not be understood as further legal contractual agreements to be signed between the counterparties.

When agreeing on these executions under the portfolio-type contract, counterparties may also fix the price for the transaction/delivery under the predefined price conditions set by the portfolio.

Like spot-type contracts, particular transactions concluded under portfolio-type contracts may cover a delivery obligation for a single cargo or a fixed number of multiple cargos.

The following chapter describes more specific reporting scenarios in relation to portfolio-type contracts specifying different delivery terms.

2.2. Reporting scenarios

• Reporting scenarios based on different delivery terms

Contracts for the purchase or sale of LNG have delivery terms typically specified either as delivery ex-ship (‘DES’) or free on board (‘FOB’).

In case of DES delivery terms^[7], the seller is responsible for the LNG until it is delivered to a specified port. After delivery, all obligations shift to the buyer. The delivery point is specified in the contract.

In case of FOB, the buyer acquires the LNG and is responsible for shipping. The delivery point may not be specified in the original contract. Both spot- and portfolio-type contracts can be agreed on a FOB basis.

REMIT reporting obligations for LNG supply contracts agreed on different delivery terms are further explained in the following section as per the scenarios previously provided by stakeholders.

Scenario 1: long-term contract with flexible quantity

Counterparties sign a single cargo supply contract on 10 April 2023 on a DES basis with indicating no fixed quantity and specifying delivery at an EU LNG terminal. The delivery is due on 1 June 2023. The delivery is made on 1 June 2023 with the volume equal to 99% of the estimated total volume.

To be reported: as a non-standard contract in Table 2 within 1 month of the day the delivery into the EU was agreed. The actual delivery of the cargo is to be reported as EXECUTION in Table 1 within one month of when the price and volume are known. In case the contract specifies fixed price and quantity, it is to be reported in Table 1 as BILCONTRACT on a T+30 days basis.

Scenario 2: long-term contract with single cargo with variation of the delivery point (from non-EU to EU terminal)

On 10 April 2023 counterparties sign a single cargo supply contract including delivery and volume optionality and agree on the same day to deliver to a non-EU LNG terminal. At a later date (12 May 2023), the delivery optionality is exercised, and the parties agree to deliver to an EU LNG terminal. The delivery was made on 1 August 2023 with the volume equal to 98% of the estimated total volume.

To be reported: as a non-standard contract in Table 2 within 1 month of the day the delivery into the EU was agreed (i.e. 12 May 2023). The actual delivery of the cargo is to be reported as EXECUTION in Table 1 within one month of when the price and volume are known.

Scenario 3: multi-cargo with variable delivery

Counterparties sign a multi-cargo supply contract (portfolio-type contract agreed on an FOB basis) with the buyer having the optionality to decide where the delivery is to be made globally, depending on the commercial preferences at the time. The contract is signed on 10 July 2023 with the agreement to deliver 10 cargos (each cargo of 3million MMBtu) over three years to any LNG terminals in the world. On 7 October 2023, the parties agree to deliver (execution) one of the cargos to an EU LNG terminal. The delivery is due on 1 December 2023. Eventually the delivery is made on 1 and 2 December with the volume equal to 102% of the estimated total volume.

To be reported: as a non-standard contract in Table 2 for the cargo within 1 month of the day the delivery into the EU was agreed (7 October 2023). The actual delivery of the cargo is to be reported as EXECUTION in Table 1 within one month of when the price and volume are known. Any subsequent delivery/cargo delivered into the EU shall be reported similarly.

Scenario 4: variation of the delivery point (from EU to non-EU terminal)

Counterparties agree on a single cargo supply contract to deliver to an EU LNG terminal with delivery optionality (portfolio-type contract). The contract is signed on 10 September 2023. At a later date (12 October 2023), by cargo nomination the delivery optionality is exercised (execution and parties agree to deliver to a non-EU LNG terminal instead.

To be reported: as a non-standard contract in Table 2 within 1 month of the day the delivery into the EU was agreed (which is, in this case, the day the contract was signed). Once the commercial agreement has been made to deliver to a non-EU location, the contract has to be early terminated with Action type ‘C’ within one month of the day of the agreement to deliver the cargo to a non-EU LNG terminal.

Scenario 5: long-term contract with multi-cargo delivery

A multi-cargo supply contract is signed on 10 September 2023 where counterparties agree to deliver 10 cargos (each cargo of 3million MMBtu) over three years, all with the same volume, price and delivery location, which is an EU LNG terminal. The contract is considered a portfolio-type contract since the actual delivery time of the 10 cargos is to be agreed at a later date. The first delivery is due on 1 October 2023. The first delivery was made on 1 October with a volume equal to 101% of the estimated total volume.

To be reported: as a non-standard contract in Table 2 within 1 month of the day the delivery into the EU was agreed (which is, in this case, the day the contract was signed). The actual delivery per cargo is to be reported as EXECUTION in Table 1 within one month of when the price and volume are known.

Scenario 6: spot in-tank transfer with fixed price and quantity

Counterparties agreed via a spot in-tank transfer to deliver gas in-tank at an EU LNG terminal with a fixed quantity of gas at a fixed price with spot delivery. The contract is signed on 1 September 2023 for delivery on 2 September 2023.

To be reported: as a non-standard BILCONTRACT in Table 1 with the outright price and volume for the contract (as per normal pipeline gas supply contracts with outright price and volume) within one month from the date of the agreement.

Scenario 7: term in-tank transfer with variable price and quantity

Counterparties agreed via a term in-tank transfer to deliver gas in-tank at an EU LNG terminal with a variable quantity over a 3-month delivery, with a price based on a formula. The contract is signed on 1 September 2023 and deliveries occur daily throughout September, October and November 2023.

To be reported: as a non-standard contract in Table 2 within one month of the day the delivery at EU LNG terminal was agreed (which is, in this case, the day the contract was signed). The actual delivery per cargo is to be reported as EXECUTION in Table 1 per the invoicing cycle period (i.e. monthly as per normal non-standard pipeline gas supply contracts) within 1 month of when the price and volume are known. As indicated in Annex II to the TRUM, the Agency understands that billing cycle and invoicing date is the last point in time that the price and quantity can be discovered. Since transactions related to in-tank transfers are not concluded on a DES or FOB basis, Data field (13) Contract type should be populated with one of the accepted values which has no reference to any delivery terms (e.g. ‘SO’, ‘FW’, etc.). 

• Reporting scenarios related to reloading

LNG transactions associated with reloading shall be reported as follows:

Reload occurs at the origin EU regasification terminal

If the reload occurs at the origin EU regasification terminal and no-title transfer happens, there is no transaction reporting required. Example: market participant A reloads gas from its in-tank inventory.

However, if a title transfer happens in-tank or after the entry flange, then this transaction is reportable if Counterparty A transfers title to Counterparty B at the flange which loads a cargo.

Reload occurs at the destination EU regasification terminal

Where a title transfer happens at an EU destination, this transaction is reportable.

Example: Market participant A reloads its own cargo from any (EU or non-EU) LNG facility and sells it to Market participant B at another EU LNG facility, destination.

If there is no title transfer or commercial transaction, there is no transaction reporting.

3 Contracts for the supply of LNG traded on organised market places

Contracts for the supply of LNG that are admitted to trade on organised market places and specify delivery points located in the EU are considered spot-type contracts. Spot-type contracts related to LNG that are admitted to trade at organised market places are considered standard contracts under REMIT and shall therefore be reported in Table 1 on a T+1 day basis.

In general, under REMIT, the reporting of transactions, including orders to trade, related to LNG that take place on organised market places, should not differ from the reporting of any other transactions that take place on organised market places, as specified in the TRUM and its Annexes. 

Standard contracts related to LNG that are admitted to trade at organised market places and reportable under REMIT shall be listed in ACER’s List of Standard Contracts.

With regard to financially settled derivatives contracts related to LNG, market participants shall note that as long as such contracts fulfil the definition of a wholesale energy product as defined in Article 2(4) of Regulation (EU) No 1227/2011 on wholesale energy market integrity and transparency (‘REMIT’), they fall under the scope of REMIT, irrespective of where and how they are traded. For more information, reporting parties should consult Q III.3.24. in the Q&As on REMIT document.

As stated in Annex VI to the TRUM for Data Field (48) on the correct reporting of Delivery point or zone, any contract related to the supply of electricity or gas, irrespective of whether the contract is a spot, a physical forward, a future or an option contract, has a reference to a delivery point or zone. Also, financial derivatives related to EU electricity or gas have a reference price or other attributes that relate to the delivery of the commodity. Therefore, if reportable under REMIT, the transaction related to financial derivatives on LNG shall also identify an LNG terminal (using its EIC W code) as delivery point.

4 Data reporting requirements 

When reporting transactions, including orders to trade, and contracts related to the supply of LNG under REMIT, reporting parties should pay special attention to the correct population of the following data fields in Table 1 and Table 2 (in addition to the guidance already provided in the TRUM and its Annexes on the reporting of standard and non-standard contracts) in order to enable the identification of the record as representing a transaction or contract related to LNG.

5 Contracts out of scope of reporting

The following contracts are outside the scope of transaction reporting:

• Contracts for the supply of LNG before the entry flange of an EU LNG regasification terminal

Contracts for the supply of LNG before the entry flange of an EU LNG regasification terminal, for example an exchange of title on the high seas outside the EU, are not subject to transaction reporting under REMIT. Cargos traded under such contracts are subject to the reporting of fundamental data provided once the cargo is unloaded at an EU LNG regasification terminal.

If the cargo – once bought on the high seas outside the EU – under this type of contract is re-traded by the buyer at or after the entry flange of an EU LNG regasification terminal, then the transaction related to the new contract will be subject to reporting.

• Transaction for the supply to LNG trucks

In general, transactions for the supply to LNG trucks (e.g. LNG truck loading and LNG marine fuel deliveries) are non-reportable.

However, if the LNG is sold from the truck to any system connected to a network (e.g. National Transmission System, Distribution Network, LNG facility, storage etc.), then the contract would be reportable.

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[1]More information is available in Question III.3.34 of the Q&As on REMIT

[2]Guidance on LNG market reporting provides guidance to LNG market participants on how to fulfil their obligation under Regulation 2022/2576 to report LNG market data to ACER for the purpose of the calculation and publication of the LNG price assessment and benchmark. During the consultation process with stakeholders on the Guidance on LNG market data reporting. ACER clarified the type of contracts, delivery terms and ways of trading typical for supply contracts related to LNG, which have been adopted in this document.

[3]As prescribed in the Annex to Commission Implementing Regulation (EU) No 1348/2014

[4]Descriptions of delivery terms are provided in Chapter 3.1.3.

[5]For non-standard contracts with a fixed price and quantity, Data Field (22) Contract Name shall indicate BILCONTRACT and Data Field (27) Organised market place ID / OTC shall indicate XBIL. Please refer to TRUM and its Annex II for further guidance on how to report bilateral contracts.

[6]See the extra guidance box on Reporting bilaterally agreed index trades in Table 1 and Table 2

[7]Referencing DES is an industry practice, despite the fact that the term has been officially discontinued. A DES-type of delivery may be understood as equivalent to the currently adopted Incoterms rule ‘Delivered at Place’ (DAP) and ‘Delivered at Terminal’ (DAT).