Common use of Allocation and Valuation Clause in Contracts

Allocation and Valuation. The quantity of Forties Blend and Raw Gas to which each Shippers Group shall be entitled is calculated by INEOS using the FPS System allocation and valuation system. This method of allocation and value adjustment is based on process simulation and on the principle that "value in equals value out". The system has been tried, tested and well understood in the industry and is viewed as being fair and equitable. Where Shippers Pipeline Liquids are to be measured and sampled individually to a Fiscal standard, the Shippers Group’s entitlement to Forties Blend and Raw Gas shall be calculated on a primary allocation basis. Where Shippers Pipeline Liquids are to be measured to a fiscal standard as part of a commingled stream, allocation will be performed on secondary basis. By default, all value adjustment is performed at the primary level, with secondary allocation allocating on a volume basis only. As an additional service, the Shippers Group may request INEOS to perform secondary allocation adjusted for both value and volume.