Natural Gas Agency Agreement

Note: it is the responsibility of any purchasing organization that wishes to use the framework agreement to ensure that it has the right to do so. The agency contract is listed in the buyer`s guide as Schedule A and is an appendix to this page. 6A series of studies that study the natural gas sector discuss contractual relationships in different institutional contexts. Hubbard and Weiner (1986) analyze long-term natural gas supply contracts between producers and pipelines following the deregulation of U.S. drilling prices and dump a theoretical model for determining catch-or-pay rules. Crocker and Masten (1988) discuss and test the impact of regulatory measures on the duration of the contract to demonstrate that distortions in performance incentives increase the risk of long-term agreements and thus reduce the duration of contracts. Neuhoff and Hirschhausen (2005) discuss the role of long-term natural gas contracts in markets that are liberalized. They show that strategic producers and consumers benefit from lower prices and higher market volume when long-term demand elasticity is significantly greater than short-term elasticity. Hirschhausen and Neumann (2008) provide an empirical analysis of the evolution of contract structure in the international gas trade. They note that the duration of the contract decreases as the market structure evolves towards more competitive systems and continues to support the transaction cost economy empirically by showing that investments in certain infrastructures extend the duration of the contract by an average of three years. The GSA or gas sales contract is an exchange of natural gas in a place of delivery (a specific place where the gas changes ownership) for a sum of money.

GSAs can be short, medium or long term and range from simplification to complexity. GSAs can also occur along several points in the value stream. A producer could sell his gas at the sale of wells, the collector (regional owner of small diameter pipelines) could then transfer the gas to the intergovernmental pipeline through another agreement and eventually sell the gas to the plant. 26 Changes in the institutional framework call for fundamental changes in the organizational behaviour of market participants in this “second generation” LNG market. Increased competition, reflected in the smooth functioning of spot markets, greater flexibility in contracts and increased international trade, is putting increased pressure on traditional players. Global mergers and acquisitions, integration and strategic partnerships have become routine, and the sector is dominated by a small number of powerful players. Several authors give perspectives on emerging business strategies. B, such as Cornot-Gandolphe (2005) and Iniss (2004), suggest that long-term contracts are increasingly accompanied by flexible short-term contracts3.

Shorter and/or more flexible contracts support arbitrage trading with deliveries dedicated to the highest value market. Public bodies with access to the national gas contract must submit a signed agency agreement to Scottish public procurement. Asset specificity varies depending on the transaction in the industry; in our case, it refers to the degree of non-feasibility of an LNG import terminal. The characteristic of a seller`s market, which is accompanied by the restructuring and liberalization of the downstream natural gas (and electricity) markets, results in a specificity downstream of the assets.

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