Reporting Obligations Of European LNG Traders

Obligation To Report LNG Transaction Data

LNG trading companies which supply and purchase LNG for delivery in the European Union are considered to be "market participants" under REMIT¹ and must report each transaction for the supply or purchase of LNG they enter into to ACER (EU Agency for the Cooperation of Energy Regulators), pursuant to the provisions of Article 8(1) of REMIT².
The reporting of wholesale energy market transactions such as LNG sale transactions is mandatory for both parties to the transaction, seller and buyer. According to Article 8(1) of REMIT, the information reported shall include the precise identification of the wholesale energy products bought and sold (i.e. LNG), the price and quantity agreed, the dates and times of execution, the parties to the transaction, the beneficiaries of the transaction and any other relevant information.
Prior to entering into an LNG transaction which is required to be reported to ACER in accordance with the Article 8(1) of REMIT, the LNG trading companies must register as "market participants" with the national regulatory authority in the EU Member State in which they are established or resident or, if they are not established or resident in the EU, in an EU Member State in which they are active³. The obligation to register as "market participants" pursuant to Article 9(1) of REMIT with the competent national regulatory authority and to report LNG transaction data to ACER in accordance with Article 8(1) of REMIT also applies to non-EU and non-EEA trading companies which supply LNG to EU⁴. Such trading companies must register as "market participants" with the national regulatory authority in the EU Member State to which they deliver the LNG.
At the time of registration as "market participants", LNG trading companies can either indicate a third party RRM (registered reporting mechanism) to which they delegate the responsibility of reporting on their behalf or indicate their "Intention to become a Reporting Entity" (i.e. a self-reporting market participant) or select both options. If an LNG trading company decides to delegate the task of reporting its transaction data to one or more RRMs, it should indicate which RRM(s) it intends to use for this purpose.
The LNG trading companies which intend to report directly their LNG transactions should indicate this in the electronic registration form when registering as "market participants" with the relevant national regulatory authority.

What LNG Transactions Are Reportable

The LNG sale transactions providing for delivery of LNG at or after the entry flange of an EU LNG terminal of an EU LNG terminal are considered contracts with delivery in the EU and must be reported to ACER pursuant to the provisions of Article 8(1) of REMIT and Article 3(1) of the EU Commission Implementing Regulation No. 1348/2014⁵.
The LNG sale transactions with the delivery point at an EU LNG terminal can be:
- Ex Ship or DAP sale transactions, regardless of whether the title to the LNG cargo passes at the time of delivery or in international waters before the delivery⁶;
- In tank transfers, i.e. the sale transactions where the title to the LNG cargo is transferred by the seller to buyer while the LNG cargo is held in storage tanks at an EU LNG terminal⁷;
- FOB sale transactions involving reloading of LNG cargoes previously discharged at EU LNG terminals used as hubs for further distribution in EU⁸.

Rules For Reporting LNG Transaction Data

The contracts for the delivery of LNG at EU LNG terminals are "non-standard contracts" because these contracts are not traded at an organised market place⁹.
The Article 5(1) of the EU Commission Implementing Regulation No. 1348/2014 stipulates that the non-standard contracts for the supply of natural gas must be reported to ACER with the details set out in Table 2 of the Annex and that the details of transactions executed within the framework of non-standard contracts specifying at least an outright volume and price must be reported to ACER with Table 1 of the Annex.
The Article 7(4) of the EU Commission Implementing Regulation No. 1348/2014 stipulates that the details of non-standard contracts including any modification or termination of the contract as well as the transactions executed within the framework of non-standard contracts specifying at least an outright volume and price must be reported to ACER no later than one month following the conclusion, modification or termination of the contract.
This means that the Ex Ship or DAP sale transactions providing for delivery of LNG at an EU LNG terminal must be reported to ACER initially as non-standard contracts with Table 2 based on the contracted volume within one month from the day when the delivery in EU was agreed and subsequently with Table 1 as an execution (delivery) within one month from the day when the final volume and price are known (invoicing date).
The in tank transfers, i.e. the sale transactions where the title to the LNG cargo is transferred by the seller to buyer while the LNG cargo is held in storage tanks at an EU LNG terminal, should be reported to ACER with Table 1 as non-standard contracts with outright volume and price within one month from the day when the volume and price are known (invoicing date), because these transactions involve a fixed quantity of gas with a spot delivery at a fixed price.
The FOB sale transactions providing for delivery of LNG at EU LNG terminals must be reported to ACER using Table 2 and then Table 1 because the actual volume and thereby the price of such LNG cargoes will be known to the contracting parties only after the delivery of LNG cargo at the EU LNG terminal.
The transaction data reporting must be done through ACER`s REMIT Information System (ARIS) which is the ACER`s IT system for data collection, data sharing and automatic screening and monitoring of trading activities in wholesale energy products.

Rules For Reporting LNG Transaction Data For Diverted Cargoes

The flexible destination clauses giving the buyers in the Ex Ship Sale Agreements the option to ask for delivery of LNG cargoes at whatever terminal they choose from a pre-agreed geographical area or areas allow the buyers to manage their take-or-pay obligation by diverting the surplus LNG cargoes to other markets. ACER considers that in case of a Master Ex Ship Sale Agreement (multi cargo supply contract) giving the buyer the option to nominate an alternative receiving terminal within EU or other geographical areas in the world can occur the following scenarios:

1. The contracting parties conclude a sale transaction with the delivery point at an EU LNG terminal. The LNG transaction should be reported to ACER initially as a non-standard contract with Table 2 based on the contracted volume within one month from the day when the delivery in the EU was agreed. If subsequently the buyer exercises the option to nominate an alternative receiving terminal and thereby the LNG cargo is diverted from the EU LNG terminal already notified to ACER to another EU LNG terminal, the cargo diversion to the latter EU LNG terminal should be reported to ACER as a lifecycle event the Action type "M" for Modify¹⁰ (modification of details of the previously reported contract), stating the EIC W Code of the LNG terminal¹¹.
Once the LNG cargo is delivered to the latter EU LNG terminal and the quantity and price are known, the market participants (seller and buyer) should report with Table 1 the execution under the framework of the non-standard contract within one month from the day when the final volume and price are known (invoicing date).

2. The contracting parties conclude a sale transaction with the delivery point at a non-EU LNG terminal. The buyer subsequently nominates an alternative receiving terminal in EU. The LNG transaction should be reported to ACER initially as a non-standard contract with Table 2 based on the contracted volume within one month from the day when the delivery in the EU was agreed and subsequently with Table 1 for the Execution (delivery) within one month from the day when the final volume and price are known (invoicing date)¹².

3. The contracting parties conclude a sale transaction with the delivery point at an EU LNG terminal. The LNG transaction should be reported to ACER initially as a non-standard contract with Table 2 based on the contracted volume within one month from the day when the delivery in the EU was agreed. If subsequently the buyer exercises the option to nominate an alternative receiving terminal and thereby the LNG cargo is diverted from the EU LNG terminal already notified to ACER to a non-EU LNG terminal, the cargo diversion to the non-EU LNG terminal should be reported to ACER as a lifecycle event the Action type "C" (Cancel) within one month from the day when it was agreed to deliver the cargo to a non-EU LNG terminal.

Obligation To Report Fundamental Data Relating To The Use Of EU LNG Facilities

LNG trading companies which supply and purchase LNG for delivery in the European Union have the obligation as "market participants" under REMIT to report to ACER and national regulatory authorities the information related to the use of LNG facilities. This information is referred to as "fundamental data" in Article 2(1) of the EU Commission Implementing Regulation No. 1348/2014.
The purpose of fundamental data reporting under REMIT is to enable ACER and national regulatory authorities in the EU Member States to monitor trading activity in wholesale energy markets.
The details on how to report fundamental data on LNG are provided in ACER`s Manual of Procedures on transaction data, fundamental data and inside information reporting. According to ACER`s Manual of Procedures on transaction data, fundamental data and inside information reporting, the LNG trading companies must provide to ACER, and on request, to the national regulatory authority the following reports:
- the LNG Participant Activity Report; and
- the LNG Planned Usage Report.

In the LNG Participant Activity Report, the LNG trading companies must provide daily updates with regard to the movement of LNG into and out of each LNG terminal they use within a gas day.
The LNG Participant Activity Report must contain the information required in the Article 9(5)(a) of the EU Commission Implementing Regulation No. 1348/2014 in respect of unloading and reloading of LNG cargoes at EU LNG terminals: i.e.
(i) date of unloading or reloading;
(ii) volumes unloaded and/or reloaded per ship, converted in GWh;
(iii) the name of the terminal customer if different from the reporting party (the name and identification code provided by the national regulatory authority or ACER to the market participant who has an access contract with the LNG terminal operator and is the recipient of the unloaded LNG cargo or the provider of the reloaded LNG cargo);
(iv) name of the LNG ships unloading or reloading LNG cargoes at the LNG terminal (i.e. the IMO Code of the ships unloading or reloading LNG cargoes at the LNG terminal); and the size of the LNG ships unloading or reloading LNG cargoes, i.e. the total cargo tank capacity as a volume (m³);
The LNG Participant Activity Report should also mention:
- lngFacilityIdentifier (EIC W Code assigned by ENTSOG to the LNG terminal¹³);
- marketParticipantIdentifier (name and identification code of the LNG trading company which has the reporting obligation);
- terminalCustomerIdentifier (name and identification code of the market participant who has an access contract with the LNG terminal operator and is the recipient of the unloaded LNG or the provider of the reloaded LNG).
The LNG Participant Activity Report must be provided daily by the LNG trading companies, but no later than the next working day following unloading or reloading of LNG cargoes.
The LNG trading companies can delegate their reporting obligation to LNG terminal operators or to any other RRM (Registered Reporting Mechanism).
In the LNG Planned Usage Report, the LNG trading companies must provide in accordance with the Article 9(5)(b) of the EU Commission Implementing Regulation No. 1348/2014 a monthly forecast of the planned usage of each EU LNG terminal they use, with details of the expected deliveries and planned unloading and reloading dates for the month ahead.
The LNG Planned Usage Report should also mention:
- lngFacilityIdentifier (EIC W Code assigned by ENTSOG to the LNG terminal);
- marketParticipantIdentifier (name and identification code of the LNG trading company which has the reporting obligation);
- terminalCustomerIdentifier (name and identification code of the market participant who has an access contract with the LNG terminal operator, if different from the reporting party);
- deliveryVolume (the volume of LNG the market participant is intending to unload or reload converted in GWh).
The LNG Planned Usage Report should be submitted once a month no later than the last day of the month preceding the calendar month to which the report relates to¹⁴.
The LNG trading companies can delegate their reporting obligation to LNG terminal operators or to any other RRM (Registered Reporting Mechanism).


by Vlad Cioarec, International Trade Consultant

This article has been published in Commoditylaw`s Gas Trade Review Edition No. 1.


Endnotes:

1. See Sub-section 3.4 of ACER Guidance on the application of REMIT (EU Regulation No. 1227/2011 on wholesale energy market integrity and transparency).
2. For the purpose of market monitoring, Article 8(1) of REMIT imposes an obligation on market participants to report to ACER the wholesale energy market transactions ("transaction data"). The purpose of transaction reporting under REMIT is to enable ACER and national regulatory authorities in EU Member States to monitor trading activity in wholesale energy products to detect and prevent suspected market abuse (insider trading and market manipulation).
3. See the provisions of Article 9(1) and (4) of REMIT.
4. See Sub-section 3.5 of ACER Guidance on the application of REMIT.
5. See ACER Answer to Question 3.1.21 in ACER document "Frequently Asked Questions (FAQs) on REMIT transaction reporting (11th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.
6. See ACER Answer to Question 3.1.49 in ACER document "Frequently Asked Questions (FAQs) on REMIT transaction reporting (11th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.
7. See ACER Answers to Questions 1.1.8 and 3.1.22 in ACER document "Frequently Asked Questions (FAQs) on REMIT transaction reporting (11th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.
8. See ACER Answer to Question 3.1.24 in ACER document "Frequently Asked Questions (FAQs) on REMIT transaction reporting (11th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.
9. According to Article 2(2) and (3) of the EU Commission Implementing Regulation No. 1348/2014, "non-standard contract" means a contract concerning any wholesale energy product that is not a standard contract, i.e. a contract concerning a wholesale energy product admitted to trading at an organised market place, irrespective of whether or not the transaction actually takes place on that market place.
10. See ACER Answer to Question 3.1.25 in ACER document "Frequently Asked Questions (FAQs) on REMIT transaction reporting (11th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.
11. See ACER Answers to Question 3.1.2 and Question 3.1.23 in ACER document "Frequently Asked Questions (FAQs) on REMIT transaction reporting (11th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.
12. See ACER Answer to Question 3.1.22 in ACER document "Frequently Asked Questions (FAQs) on REMIT transaction reporting (11th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.
13. European Network of Transmission System Operators for Gas.
14. See ACER Answer to Question 3.2.8 in ACER document "Frequently Asked Questions (FAQs) on REMIT fundamental data and inside information collection (6th Edition)" available on REMIT Portal: https://www.acer-remit.eu/portal/home.