Issues and Challenges of Gas Contracts
Contracts are agreements entered into by two parties with the intention of creating a legal obligation. As the gas sector in India has evolved from pre-NELP regime to a market open to international LNG contracts, the domestic gas contracts also evolved wi
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Abstract Contracts are agreements entered into by two parties with the intention of creating a legal obligation. As the gas sector in India has evolved from pre-NELP regime to a market open to international LNG contracts, the domestic gas contracts also evolved with newer dimensions, newer clauses, and newer obligations or bindings. Gas contracts are entered into in various forms with different objectives across the gas value chain. In the upstream sector, production sharing contract (PSC) is signed between Government of India and the Producer Consortium. Joint operating agreement (JOA) is signed among the consortium members. Gas producer also signs gas supply contracts (GSC)/gas supply agreement (GSA)/gas sales and purchase agreement/contract (GSPA) with the transporter/trader in the midstream segment. In the downstream, the transporter/trader signs agreements with the customers/consumers of gas. The supply gets governed by the GSC, and the transmission is governed by gas transmission agreement (GTA). In some cases, the transmission and the supply gets clubbed in a single contract termed as GSTA or gas supply and transmission contracts. The downstream contracts may be named differently but structurally they still remain same with minor modifications. This chapter brings in illustration on different types of midstream and downstream contracts, the process description of execution of contracts, how the contracts have evolved, and futuristic changes expected in these contracts.
Keywords Gas sales agreement Gas sales and purchase agreement Gas supply and transmission agreement Gas transmission agreement Capacity tranche Gas sales and purchase notice
M. Das (&) Strategic Planning, Kuwait Petroleum Corporation, Kuwait City, Kuwait e-mail: [email protected] © Springer Nature Singapore Pte Ltd. 2017 S.K. Kar and A. Gupta (eds.), Natural Gas Markets in India, DOI 10.1007/978-981-10-3118-2_4
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1 Introduction Major developments that have occurred in the Indian gas industry in last two decades would include the introduction of NELP regime, import of liquefied natural gas (LNG), KG D6 gas find, formulation of Petroleum and Natural Gas Regulatory Board (PNGRB),1 and Governmental control on domestic gas prices. The evolution of gas sales contracts has accordingly evolved around these developments in terms of content and in terms of nomenclature as well. From the period of gas supply by couple of national companies like ONGC and Oil India Limited (OIL), today gas is sold in India not only from domestic sources but from sources in abroad in the form of regasified LNG (RLNG). In fact, last two decades have been very significant as far as the gas industry in India is concerned. There have been changes in the exploration aspects from pre-New Exploration Licensing Policy (NELP) regime to bidding process under NELP,2 from unregulated transportation aspects to regulated services under PNGRB, from limited domestic gas sources to vast RLNG shipments from far flung countries. These all aspects have influen
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