Legal Definitions - gas contract

A gas contract is a legally binding agreement specifically for the purchase and sale of natural gas. These contracts outline the terms and conditions under which natural gas will be supplied, including details such as the quantity, price, delivery schedule, quality specifications, and the duration of the agreement. They are essential for ensuring a stable and predictable supply of natural gas from producers to various consumers, ranging from large utility companies to industrial users and commercial entities.

Here are a few examples to illustrate how a gas contract works:

• Example 1: Producer to Utility Company

  An independent natural gas exploration and production company signs a long-term agreement with a major regional utility provider. This contract specifies that the exploration company will deliver a certain volume of natural gas daily for the next ten years at a price tied to a market index, to be used by the utility to power homes and businesses in several states.

  This illustrates a gas contract because it's a formal, legally enforceable agreement between a producer and a large-scale distributor for the consistent sale and purchase of natural gas over an extended period, ensuring supply for a vast customer base.

• Example 2: Industrial Manufacturing Plant

  A large fertilizer manufacturing plant, which uses natural gas as a primary feedstock and fuel source for its operations, enters into a contract with a gas marketing company. The agreement guarantees the plant a firm supply of natural gas at a fixed price for the upcoming three years, crucial for budgeting and uninterrupted production of agricultural chemicals.

  This demonstrates a gas contract as it's a direct agreement for the sale of natural gas to an industrial end-user, securing a vital resource for their manufacturing processes and providing price stability.

• Example 3: Commercial Real Estate Development

  A property development firm constructing a new complex of office buildings and retail spaces signs a contract with a local natural gas distribution company. This contract outlines the terms for the installation of gas lines to the new development and the subsequent supply of natural gas to all commercial tenants once the buildings are completed and occupied.

  This is an example of a gas contract because it establishes a formal agreement for the future sale and delivery of natural gas to a new commercial development, including the necessary infrastructure setup, ensuring energy access for the new businesses.