Exchange Agreements

An exchange agreement allows products to be traded between companies. The partners often agree to exchange specific quantities of product for a given time period. Exchanges involve different products or multiple products and often include a differential that one party pays per unit of product exchanged. Financial differentials are not currently managed by Agreement Management, but are supported with the integrated systems.

If the agreement is for an extended period (one year, for example), the parties normally agree on monthly quantities to exchange. Partners generally expect exchanges of physical product to remain approximately in balance. However, imbalances do occur and are usually monitored on a monthly basis. Partners often review their contracts annually to bring the contracts in balance with adjustments, monetary payment, or product repayment.