futures contracts that provide for the sale and purchase of gas for a fixed period and are generally considered to be short-term (one to five years) or long-term (often 20 years, but much longer); (ii) oil prices. Generally very popular with buyers and sellers and widely used in gas sales contracts. They are acceptable to buyers because they are preferred by sellers, because the prices of petroleum products are closely linked to crude oil prices. The main contractual terms and conditions used in gas sales contracts; Gas contracts can be divided into two approximate categories; Exhaustion and supply contracts. In addition, other types of contracts are available on the basis of market requirements, mainly short-term. Although many contracts are slightly different from the standard, each category has some guidelines. The main features of these gas contracts are listed below; This is an important aspect of gas sales contracts, which defines the amount of gas actually purchased and sold over a period of time. Without the promise of the buyer and seller to buy and deliver a minimum amount of gas, the mere signing of the contract does not guarantee any sale. Therefore, the supply of quantities in a contract becomes very important. The different phases of quantity fixing are: Long-term gas sales contracts allow producers to develop isolated gas deposits and sell production to consumers who, in turn, use these resources for electricity, fertilizers and other industrial sectors. The higher the price of gas, the more likely a number of future economic circumstances are to put pressure on the seller`s income and/or the buyer`s facilities.
Therefore, the main considerations that will be under consideration when negotiating a buyer`s contract will be to ensure sufficient flexibility to manage downstream demand, minimize commitments and ensure that gas supply is associated with market demand. However, the seller must indicate the amount of gas to be supplied during the duration of the contract and how the buyer can limit flexibility and minimize his own risk of non-supply of gas. There are several standard forms contracts for physical (rather than fictitious) gas sales, which can guide the parties in choosing conditions and rationalization, once the gas has entered the pipeline, it arrives at its destination – a local distributor, an electricity producer, a final consumer or a gas store. Sophisticated pipeline gas control centres monitor and operate the distribution system and keep natural gas safely at its destination. Effective ACQ – DCQ x 365 – Weighted average DCQ x PM This is the amount of gas the buyer expects in a contract year. It corresponds to the product of the multiplication of daily contracts Quantity applicable to the respective contract year by the number of days of the contract year. Under supply contracts, the seller promises to deliver a certain volume of gas to a delivery location without any obligation through the gas source. The quantity and requirements for delivery time are clearly indicated. The characteristics of the delivery contract are: iv) coal.
This is also a widely prized indicator for buyers, as coal prices are expected to rise more slowly than oil prices.