The commodity contact management process is not the most organized process in Midstream Energy. Even though each commodity contract simply contains three major details – the quantity of crude being traded, the delivery dates, and the minimum contract price changes – Midstream companies still struggle to manage, let alone improve, the contract process. Energy companies agree on multiple contracts every day and each trade consists of tedious tasks that can be daunting and are open to many errors and delays, especially if you’re still using the antiquated Yahoo! Messenger client to start trade conversations. Here we discuss how Energy companies can improve the commodity contract management process.

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According to Merriam-Webster, a commodity is simply something of value that is bought and sold, but more specific to this blog, a commodity is “an article of commerce, especially when delivered for shipment.” Copper, corn, coffee and crude oil are all commodities that are sold and bought daily. These commodities are traded based off a commodity futures contract, where details of the trade, including price per quantity (e.g. volume/weight) of the commodity, are described for both the buyer and seller. Let’s take a deeper look at how a commodity contract works.

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Believe it or not, for the last 18 years, the world’s oil giants have utilized Yahoo! Inc.’s Messenger as their default communication tool for commodity trading. In North America, Canada is a huge user of Yahoo! Messenger, allowing commodity traders to ask about oil production, bid on crude, and ultimately seal deals within upstream and midstream Energy. With recent news that Yahoo!’s CEO Marissa Mayer intends to eliminate up to 15% of the company’s workforce and discontinue Yahoo! Messenger, many crude oil and petroleum movers are looking for alternatives that not only allow for chatter, but enable traders to expedite contracts and enhance the trading process. Continue reading to learn about legacy Yahoo! Messenger alternatives for commodity trading.

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We all know that midstream is a contract-based sector in Energy. Trading and logistics are all part of midstream commodity contract management. However, there are many contracts and requests that must be managed before commodities are transferred over to midstream businesses. Prior to any production many contracts such as concession, joint venture (JV), production sharing agreements (PSAs), and service contracts must be executed. Having an efficient contract management process is key. Let’s explore some best practices in contract management for Upstream Energy.

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One of the most difficult obstacles in midstream commodity trading is when apportionment is announced. There are several reasons for apportionment, but apportionment typically occurs when shippers are allocated more capacity than a pipeline has physical space for, indicating excess demands or lower pipeline capacities. Many existing pipelines, like the Enbridge Mainline, are being used to transport millions of barrels per day. This can lead to overloading and the potential for apportionment. The negative impacts of apportionment, even in the most complicated cases can be mitigated by using good commodity contract management software. Read on to learn how to save money during apportionment by investing in the right solution.

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Nothing is as straightforward as it seems, not even commodity contract management for oil and gas! Unlike regular purchases we make every day, midstream trades are filled with tedious tasks that can be daunting and are open to many errors and delays. Here I explain the steps taken to execute a trade and show how you can leverage a commodity contract management tool to quickly secure a deal and avoid costly errors and delays.

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