Oil and Gas Contracts, Regulation research paper
Production of gas is a highly costly venture that requires vast resources in both finances and expertise. Producers of gas even in situations where they own gas fields, have to rely on other investors for transportation and sale of their gas. Thus, this essay discusses the terms of Gas Transportation Agreement (GTA) and their effect on both the producer of the gas and the owners of the pipeline. Both investors have to be careful before committing themselves to terms of the GTA contract so as to avoid frustrations and losses which may result. These investors are not only aiming at making profit, but also to service their debts. Thus, one is advised on the specific implications of terms that may be found in most GTA agreements. Moreover, the issue of Gas Sale Agreement is also explored. In order to gain from the investment, one has to select the most favorable deal in the prevailing circumstances.
It explores the ramifications of terms contained in Gas Transportation Agreements and Gas Sale Agreements to oil and gas producers, transporters and buyers. How are you intended to do it or your research methodology? The materials used in this research have been gathered from books, journals, research papers and online sources.
[...] The producer of gas contractually bound to produce gas at all times during the duration of fixed term. Parties to contract, knowing the risk involved in the venture (especially oil and gas production), go ahead to contract on terms that are injurious to their interests should not reasonably seek remedial reliefs when they incur loss. The reason being they had an opportunity to reject any harmful term from forming part of the contract. Nevertheless, unforeseen events may crop up to make performance of obligations under the contract difficult or impossible. [...]
[...] The designing, construction, operation and frequent maintenance of a gas pipeline are costly for the owners/lender. The lender can only bank on a properly written gas transport agreement for he can only recover his investment from the revenue stream generated by the pipeline owner from transporting oil. He has no recourse to the project company's assets. Thus, the lender to the project seeks assurance from the producer that he will regain his monetary investment (Roberts, 2011). In this case, the GTA provides for a ten-year period that the gas producing company will be utilizing the owners' pipeline to transport his gas. [...]
[...] It will also ensure a reasonable return for its shareholders. With the demand for recovery of the huge financial investment in the project, a contract of this nature has to run for a period of not less than eight years. In order, to fully recover, the gas-field development investment, the contract should be in the ten to fifteen year range (Roberts, 2011). Gas transported under long-term GTAs (mostly under a foundation contracts) is transported on a firm basis. Firm gas (capacity) is the amount of gas that a supplier commits to supplying to the purchaser in respect to the contract provisions, without interruption. [...]
[...] Sir Kenneth Bailey Katalan Lecture: Dispute Resolution in a geref Complex International Society. Melbourne University Law Review 765-808. Roberts, S. (2011). Gashole. Canoga Park, CA: Cinema Libre. Smith, M. R., & Financial Times Business Limited. (2000). The model oil and gas company. Financial Times Energy. [...]
[...] Oil and Gas Contracts & Regulation research paper Outline I. Summary II. Why is this research important III. research methodology IV. Protecting the investment of the owners/lender V. Sharing of risk VI. Disadvantages of fixed term to the producer VII. Reduction of producer's capacity due to a problem in the transportation system VIII. Recommendations IX. Conclusion Summary Production of gas is a highly costly venture that requires vast resources in both finances and expertise. Producers of gas even in situations where they own gas fields, have to rely on other investors for transportation and sale of their gas. [...]
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