Difference between Tolling Agreement and a Purchase Agreement
Tolling Agreements:
- Customer retains ownership of product
- Magellan processes transmix for a set fee per gallon
- Processing time is less than 45 days
- Finished products are allocated at Fractionator location
- Customer has option of re-consigning product
- Product price risks are retained by Customer
Purchasing Agreements:
- Customer sells the product to Magellan
- Magellan purchases transmix for a set discount per gallon to index
- Product price risks are assumed by Magellan
For all transmix agreements, customer must provide a representation that product processed by Magellan meets the EPA regulatory definition of “transmix” located in 40 CFR 80.84 “Treatment of interface and transmix”.
