Managing the risks associated with natural gas purchase contracts

This presentation described different styles of gas contracts. When markets opened in 1986, many contracts were between end users and producers, and a few marketers. Typically, contracts were for a fixed price and term. In 1990, when gas futures contracts began trading on NYMEX, contracts began to have floating prices, and prices linked to NYMEX prices. Standard gas contracts were developed in the mid-late 1990s. This paper described the differences between plain retail gas contracts, retail gas contracts between mass marketers and end users, wholesale contracts, contracts between producers and marketers, transportation contracts and domestic contracts. Both contracting parties obtain business and legal advice from consultants and lawyers with knowledge in energy transactions. Master agreement contracts were also described with reference to the Gas EDI contract. Examples of changing regulatory requirements were also outlined along with some traps to avoid. Bundled transportation agreements are standard documents that can be negotiated in special circumstances to charge customers who fail to deliver. They should be considered as tariffs