Child deal allocation¶

The child deal allocation feature allows users to allocate gas volumes from a parent deal into multiple child deals. This is typically used to divide a larger contract into smaller allocations based on buyers, delivery locations, or specific time periods.

Child deal allocation helps ensure precise operational execution, proper billing, and accurate volume tracking at a granular level. It is especially useful in natural gas trading scenarios where multiple parties or delivery points are involved in a single contract.

Note

Child deal allocation is applicable only for physical deals.

Business context¶

In natural gas trading or distribution, a physical supply contract (parent deal) often needs to be broken down into smaller segments (child deals) for various reasons:

Separate allocations for different buyers or clients
Allocation based on pipeline delivery locations
Volume distribution over specific date ranges.

This segmentation allows natural gas businesses to:

Track volumes more precisely
Manage delivery operations efficiently
Simplify reconciliation and invoicing
Ensure compliance with contractual obligations.

Understanding child deal allocation using examples¶

Child deal allocation is a crucial feature used to manage the subdivision of a parent deal into smaller, trackable components based on specific business requirements such as delivery locations or buyers. This ensures greater transparency, accuracy, and flexibility in operational execution. The following examples illustrate how child deal allocation works in different scenarios.

Example 1: Allocating to different delivery locations¶

This scenario demonstrates how a single parent deal can be split into multiple child deals based on delivery points. This is particularly useful when a supplier needs to deliver to different cities or facilities using the same contract.

Parent deal configuration

Contracted volume: 5,500 MMBtu
Pipeline: Generic pipeline
Delivery period: 01-Jan-2022 to 31-Jan-2022

The objective is to deliver part of the contracted volume to Houston and the remainder to Dallas during two different periods within the contract term.

Child deal A - Allocation to Houston¶

Pipeline: ABC pipeline
Location: Houston
Allocated volume: 3,000 MMBtu
Delivery dates: 01-Jan-2022 to 10-Jan-2022
Number of days: 10
Daily allocation: 300 MMBtu per day

This child deal ensures that 3,000 MMBtu is delivered evenly over 10 days to the Houston delivery point using the ABC pipeline.

Child deal B - Allocation to Dallas¶

Pipeline: ABC pipeline
Location: Dallas
Allocated volume: 2,000 MMBtu
Delivery dates: 11-Jan-2022 to 20-Jan-2022
Number of days: 10
Daily allocation: 200 MMBtu per day

This deal facilitates delivery to Dallas immediately following the Houston allocation, using the same pipeline but at a different location.

Result and system behavior¶

The total allocated volume is 5,000 MMBtu, broken down between two child deals.
The system deducts these volumes from the parent deal accordingly.
The remaining 500 MMBtu in the parent deal is still unallocated and can be used later for additional child deals or volume adjustments.
Users can view these allocations in the Deal volumes section to verify that each child deal has received its respective volumes.

Example 2: Allocating by buyer¶

In this scenario, the parent deal is associated with a broker who wishes to allocate the purchased volume to two different end clients. This is common in wholesale energy transactions where brokers operate on behalf of multiple customers.

Parent deal configuration

Total volume: 10,000 MMBtu
Primary buyer: Broker A
Delivery period: 01-Jan-2022 to 10-Jan-2022

Broker A wants to distribute this volume between two of their clients, Company X and Company Y, over specific timeframes.

Child deal X - Allocation to Company X¶

Buyer: Company X
Allocated volume: 6,000 MMBtu
Delivery dates: 01-Jan-2022 to 06-Jan-2022
Number of days: 6
Daily allocation: 1,000 MMBtu per day

This child deal ensures that Company X receives the first part of the delivery, evenly spread over the first six days of the contract.

Child deal Y - Allocation to Company Y¶

Buyer: Company Y
Allocated volume: 4,000 MMBtu
Delivery dates: 07-Jan-2022 to 10-Jan-2022
Number of days: 4
Daily allocation: 1,000 MMBtu per day

This deal guarantees Company Y receives their volume immediately after the delivery to Company X is completed.

Result and system behavior¶

The entire 10,000 MMBtu from the parent deal is distributed across two child deals.
The system updates the parent deal to reflect zero remaining volume.
Each child deal is now independently manageable, allowing for separate scheduling, billing, and reporting activities.
The allocations can be reviewed and verified in the Deal Management dashboard.

How to add a child deal¶

Step 1: Enable child deal allocation¶

Navigate to the deal management screen.
Open the relevant physical deal.
Check the box labeled Child Deal Allocation.
Click Save to enable the feature.

Step 2: Add a new child deal¶

After saving the physical deal, click on Add a new child deal button.
A popup window titled Add Child Deal will appear.
Fill in the required information:
1. Pipeline: Select the appropriate pipeline.
2. Pipeline location: Choose the delivery or receipt point.
3. Volume: Enter the gas volume to allocate.
4. Volume date: Enter the start date for allocation.
5. Number of days: Specify how many days the volume should be distributed.
Example

If the volume is 500 MMBtu, start date is 01-Jan-2022, and number of days is 5:
→ 500 units/day will be allocated from 01-Jan-2022 to 05-Jan-2022
→ A total of 2,500 MMBtu will be subtracted from the parent deal and assigned to the child deal.
After entering all the child deal details, click Process volume adjustment.
The system updates the parent deal volume and reflects the assigned amount in the child deal section.

Note

The system deducts the total allocated volume from the parent deal and logs it under each child deal accordingly.

Step 3: Verify allocation¶

Check both the parent and child deal volumes using the View by BAV tab in the Deal Volumes section.
Ensure the total volume adjustments match your allocation entries.

Parent deal verification¶

As shown in the screenshot below, under the View by BAV tab in the Deal volumes section, the Contractual quantity is 5500. Out of this, 5000 has been allocated as planned and unscheduled Volume, and the remaining volume has been transferred to the child deal.

Child deal verification¶

Displays each child deal along with its volume and allocation parameters.

Note

All mandatory fields must be completed before clicking Process volume adjustment on the Add child deal popup screen.
Allocation changes are applied only after the adjustment process is executed.
Child deal allocation is applicable only for physical deals.

Summary¶

The above scenarios and examples illustrate how child deal allocation enables granular control and transparency over physical gas deals. Whether allocating based on delivery points or client-specific requirements, the system ensures:

Accurate volume tracking
Clear audit trails
Flexibility in operations
Seamless integration with downstream billing and reporting systems

Proper setup and execution of child deals ultimately support better contract management and operational efficiency.

Business benefits of child deal allocation¶

Child deal allocation offers several operational and strategic benefits for organizations involved in natural gas trading, distribution, or brokerage. By segmenting a parent deal into smaller, manageable child deals, businesses can gain better control and visibility over contractual obligations and deliveries.

Enables precise tracking and reporting of deliveries¶

Allocating gas volumes into child deals makes it easier to monitor delivery performance against specific segments of the contract. This allows users to track:

How much volume is allocated to each location or buyer
The daily breakdown of scheduled volumes
Delivery status across different periods.

With clearly defined allocations, reporting becomes more structured and enables real-time insights into contract execution.

Supports complex contracts involving multiple parties or locations¶

Natural gas contracts often span across multiple clients, delivery points, or timeframes. Child deal allocation simplifies the management of such complex deals by:

Breaking down the parent volume into client-specific or location-specific segments
Allowing flexibility in setting different pipelines or delivery schedules for each child deal
Supporting brokers, marketers, and suppliers in handling multi-party obligations efficiently.

This ensures each party involved in the deal has clear visibility into their share of the contract.

Simplifies reconciliation and auditing¶

Accurate volume allocation helps reconcile delivery records against what was committed in the contracts. This reduces the risk of errors and streamlines the auditing process by:

Providing a clear trail of volume adjustments
Enabling volume-based comparison between planned and actual deliveries
Reducing manual intervention in allocation-related disputes.

Auditors can review each child deal independently, making the verification process simpler and faster.

Enhances downstream processes like billing and scheduling¶

When allocations are precise and properly defined, downstream processes become easier to manage. With child deal allocation:

Billing teams can generate client-specific invoices based on the allocated volumes and delivery schedules
Scheduling teams can plan pipeline nominations more accurately
Operational discrepancies are reduced due to clear volume segregation.

This leads to improved coordination across departments and better customer service.

By incorporating child deal allocation into deal management workflows, companies can operate with increased agility, accuracy, and confidence in their delivery commitments.