A processing agreement for the conversion of an input product for a fee. In the energy sector, tolling agreements are contracts where one party – the toller – provides a company with one form of fuel to be converted into another form of fuel on their behalf. In particular, in the liquefied natural gas (LNG) industry, tolling is a common method for financing liquefaction plants or regasification terminals. In the former case the tollers are natural gas owners who wish to convert their natural gas into LNG for transportation and storage purposes, in the latter, the tollers are LNG owners who wish their LNG to be converted into gas for distribution into the relevant end-market. In the electric power market, tolling agreements are typically between a power buyer and a power generator, under which the buyer supplies the fuel and receives an amount of power generated based on an assumed heat rate at an agreed cost.
The Energy Risk Glossary, now in its eighth edition, provides an at-a-glance explanation of the myriad specialised terms and acronyms used in energy trading and risk management.
This year, the guide has been updated by Aviv Handler of ETR Advisory. Energy Risk would like to thank him for his input into this edition, which benefits greatly from his valuable experience and insight into energy markets.
The fast-changing nature of these markets means much has changed since our last edition – almost 200 new entries and revisions have been made this year. Reflecting the increasing importance of regulation, definitions of the Markets in Financial Instruments Directive (MiFid) and the Ljubljana-based Agency for the Cooperation of Energy Regulators (Acer) make it into the glossary for the first time. A focus on improving back-office infrastructure and mitigating counterparty risk is also apparent from the inclusion of terms such as ‘portfolio reconciliation’ and ‘portfolio compression’.
The glossary is extensively cross-referenced, making for easy and thorough searches. We hope you find it useful.
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