PRT: the nomination scheme - time-limits for making nominations
To be effective a nomination must be made within 2 hours of the transaction base time.
Reg. 7 defines Transaction Base Time (TBT) as
“the time (and date) at which there is an agreed price (in the form of a unit price or formula for determination of the price) at which oil is to be delivered pursuant to the contract of sale (irrespective of whether or not a legally binding agreement has come into being).”
Therefore the companies have two hours in which to make a nomination after the time and date on which the price or pricing formula for sale of the oil in question is agreed between the parties.
It will be for the companies to retain sufficient documentation to demonstrate when this has occurred in respect of any particular proposed transaction. An example of acceptable documentation would be a copy of the (dated and timed) e-mail, fax recording the agreement between the parties.
The reason for the shortened time-limit is to try and remove as far as possible the scope for companies to track the market and only nominate at the bottom of a price cycle whilst avoiding too great a compliance burden upon those companies who will still need to nominate.
However, if evidence were to emerge that two hours is still too long a time and companies were still tax-spinning, LB Oil & Gas would consider the possibility of shortening the time-limit further.