Issues and challenges of gas contracts

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.