The ICC Banking Commission conducted its final meeting of 2024 virtually via Teams on 20-21 November. Four separate portions of the event open to Banking Commission members and ICC National Committee representatives took place.
Energy LEAP, a not-for-profit organisation in which member companies across the oil trading industry work to define standards which offer efficiency improvements in how members interact with one another, has drafted proposed wording for standby letters of credit for use in the oil trading and supply industry.
Released and labelled “Draft for Consultation: Version 25 Apr 2023”, the Energy LEAP Standby Letter of Credit, accompanied by an Annexed Payment Demand, is still subject to further development but is freely available from Energy LEAP and may be used for purposes of providing or obtaining credit support for the payment obligations of a buyer in any oil or gas transaction.
As explained in the form’s instructions: “Energy LEAP have developed this format for use globally across the energy sector to facilitate parties automating their SBLC processes or at least maximising the efficiency of the SBLC review process and the process of making a demand.”
The form is intended to be compatible with ISP98 or “eUCP 600” as applicable rules. The form contains various optional and alternative wording, supplemented by footnotes intended to explain when such modified phrasing may be appropriate for use. The form’s instructions further state: “The format seeks to allow electronic presentation of a demand by the beneficiary directly to the issuer. An Issuer insisting on paper presentation is increasingly inappropriate in today’s digital world, as is insisting a beneficiary presents via its bank. When using this format, issuers are encouraged to provide a clear detailed description of how a beneficiary can make a presentation via an electronic medium.”
According to Energy LEAP, specialists from Shell, BP, Totsa, and Chevron have played integral roles on the working group established to develop the Energy LEAP standby LC form thus far. The working group’s effort will continue.
