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Open Specification Oil Contracts Expertise

The concept of an open specification contract is to provide a stable, standardised regular supply of product meeting a general market specification that is transacted in chains of "back-to-back" contracts traded throughout the day as a physical and paper contract generating high levels of liquidity. This way of trading is reflected in the contract terms and mechanisms which are based on a general consensus between suppliers and end users balancing the end users’ general specification requirements for product with the suppliers’ ability to supply product meeting such requirements. The contract has been modified extensively since its inception in 1986. Originally, all of the terms could be covered in a single telex. It now it covers more than 20 pages.

For the past 10 years Asdem has provided advice and assistance on the CFR Far East Open Specification Form Naphtha contract terms, interpretation of the terms, market practice as it applies to the contract and resolving issues that arise from time to time amicably.

Asdem chairs panel meetings and recommends and drafts amendments to the contract and organises and chairs the yearly industry meetings.

There has been a complete lack of litigation during the life of the OSN contract, and whilst there are a number of areas in the contract that could certainly give rise to disputes, were it not for the goodwill and patience of the companies who trade it, to date litigation has been avoided.

Asdem acts as an independent third party on behalf of the charterers who nominate cargoes into OSN chains. The charterers instruct Asdem to recover their claims for demurrage, bunkers, deviation and shifting costs as quickly as possible. The charterers must pay these claims promptly to the ship owners. In 2006 we had more than USD 10.5 million in outstanding OSN demurrage claims. Today, thanks to the amendments to the contract that took effect from March 2006, the total amount of outstanding claims has been cut to less than USD 100,000.

To contact us regarding our OSN services please click here or go to the OSN website at www.osn.sg.

 
Cobat House
1446-1448 London Road
Leigh-on-Sea, Essex
SS9 2UW, United Kingdom

Office: +44 1702-481656
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  • Full Service Offices
    • Asdem - Singapore
      50 Raffles Place, Level 30
      Singapore 048623
      Office:+65 6534-9278
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    • Asdem - Mumbai
      712, Raikar Chambers
      Govandi (East), Mumbai India
      Office:+91 22-6511 9222
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    • Asdem - Bangkok
      Bangna Tower A, 16th Floor
      Bangkok, Thailand
      Office:+66 6-1465-8754
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    • Asdem - Philippines
      8430 San Bernadino Road
      SBMA, Subic Bay, Philippines
      Office:+63 927-954-1475
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  • Representative Offices
    • Asdem - Dubai
      Emirates Towers, Level 41
      Dubai, United Arab Emirates
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