Application and key parts of the Oilcode
Application of the Oilcode
Broadly, the Oilcode applies to participants in the downstream petroleum retail industry who are involved in transactions concerning terminal gate pricing arrangements or who are involved in a fuel re-selling business.
If you sell, supply, distribute, purchase or retail a declared petroleum product (such as unleaded petrol, a blend of unleaded petrol and ethanol or one or more biofuels or diesel):
- without a fuel re-selling agreement—you should read about terminal gate prices under the Oilcode
- with a fuel fuel re-selling agreement—you should read about fuel re-selling businesses under the Oilcode.
Key Parts of the Oilcode
There are 3 key parts of the Oilcode:
1. Terminal gate price and related arrangements
Under the Oilcode, fuel re-sellers that do not have a fuel re-selling agreement may buy declared petroleum product at the Terminal Gate Price (TGP).
The TGP is the price for a wholesale sale of a declared petroleum product that is temperature corrected at 15°C and expressed in cents per litre.
Fuel re-sellers without a fuel re-selling agreement (for example spot sales) have certain rights, including:
- a wholesale supplier's TGP must be posted daily and must not include any discounts or amounts for additional services (for example delivery)—discounts or additional services must be disclosed separately
- a wholesale supplier must issue a fuel reseller with particular details of the transaction after buying a declared petroleum product
- a wholesale supplier must not unreasonably refuse the supply of a declared petroleum product.
2. Fuel re-selling businesses
The Oilcode establishes minimum standards for various parties involved in a fuel re-selling business. This helps parties make more informed decisions when entering, renewing, extending or transferring a fuel re-selling agreement.
A fuel re-selling agreement is an agreement (either written, verbal or implied) between a supplier and a retailer. It has the following characteristics:
- one party (the supplier) grants another party (the retailer) the right to conduct a fuel re-selling business
- the supplier is able to exert substantial control over the operation of that business
- the fuel re-selling business will be associated with a trademark, commercial symbol or advertising that is owned, used, licensed or specified by the supplier
- the retailer is required to pay, or agree to pay, a fee before starting business.
If a commission agency agreement meets the above criteria, except the requirement or agreement to pay a fee, it is specifically identified as a fuel re-selling agreement under the Oilcode.
3. Dispute resolution scheme
Even though parties may have systems in place to comply with the Oilcode, disputes can and do arise. You should therefore consider setting in place an in-house dispute resolution system. This system should include visible and accessible complaints handling procedures to deal with disputes effectively and efficiently.
Where disputes cannot be resolved in-house, the dispute resolution scheme in the Oilcode may be engaged. The key objective of this scheme is to provide the downstream petroleum industry with an effective and relatively inexpensive way of resolving disputes. This scheme includes the appointment of the dispute resolution adviser (DRA).