Natural Gas Contracts Under Stress: Price, Quantity and Take or Pay
Article from: OGEL 1 (2006), in Liquefied Natural Gas (LNG)
Long-term contracts
Alone among hydrocarbons, natural gas, as vapour or liquefied natural gas ("LNG"), is sold under long-term contracts usually for a term of from 15 to 25 years. This longevity can be both a strength and a weakness. The strengths derive from benefits of a stable long term supply of fuel to institutional baseload gas purchasers such as electric utilities and natural gas distribution companies. Remote natural gas reserves can be developed and transported to market on the foundation of a stream of revenue earned from long-term sales to reliable purchasers. Substantial capital ...