Asdem has provided advice and assistance to the naphtha industry for many years on the CFR Far East Open Specification Form Naphtha contract (OSN)* – operations support, advice on the contract provisions and market practice as it applies to the contract, and resolving issues that arise from time to time amicably are the services provided by Asdem as the industry’s independent trusted third party advisor.
Under the OSN contract Charterers must pay demurrage, bunkers, deviation and shifting costs promptly to shipowners. Calculation of liability for these costs on the part of those traders within OSN chains is complex. Asdem acts as the independent third party providing the claims calculation and recovery service. In 2006 there was more than USD 10.5 million in outstanding OSN demurrage claims. Today, thanks to amendments to the contract that took effect from March 2006 and Asdem’s involvement, outstanding claims have been almost entirely eliminated. There has been a complete lack of litigation during the life of the OSN contract thanks to the relationships built via the annual meeting and the goodwill and patience of the companies who trade under the OSN contract.
Asdem organises and chairs industry meetings, recommends and drafts amendments to the contract and organises and also chairs the yearly industry gathering in Asia.
*Open specification contracts define a specification range for a product. Cargoes falling within the specification can be traded in back-to-back chains both as physical and paper contracts, generating high levels of liquidity. This way of trading balances end users’ requirements for product falling within the general specification with suppliers’ ability to supply product meeting those requirements. The contract establishes terms and mechanisms which reflect a general consensus between those in the industry that is renewed and updated at the annual industry meeting chaired by Asdem.