highlights of gas transportation agreement
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HIGHLIGHTS OF GAS TRANSPORTATION AGREEMENT. PRESENTED BY Barrister I.N. Inyang (CSLA, NGC) AT THE ELECTRIC POWER SECTOR TRANSACTION AND INDUSTRY REVIEW CONFERENCE HELD AT THE BANQUET HALL OF THE PRESIDENTIAL VILLA ON 28-29 TH NOVEMBER, 2011. CONTENT. PARTIES KEY TERMINOLOGIES - PowerPoint PPT PresentationTRANSCRIPT
PRESENTED BY Barrister I.N. Inyang(CSLA, NGC)
AT THE ELECTRIC POWER SECTOR TRANSACTION AND INDUSTRY REVIEW CONFERENCE
HELD AT THE BANQUET HALL OF THE PRESIDENTIAL VILLA ON 28-29TH NOVEMBER, 2011
PARTIES KEY TERMINOLOGIES CONDITIONS TRANSPORTER’S OBLIGATIONS TITLE AND RISK LOST GAS CAPACITY RESEVATION TRANSPORTATION CHARGES INVOICING AND PAYMENTS QUALITY AND OFF-SPECIFICATION GAS MEASUREMENT AND TESTING LIABILITES AND LIMITATION FORCE MAJEURE AND THIRD PARTY TRANSPORTATION OF GAS TERMINATION DISPUTE RESOLUTION GENERAL
NGC - as Transporter PHCN or GENCO - as Shipper
GENCO refers to any power generation company which emerges as a successor company to PHCN.
• Shipper's Stock Account A designated account of the Shipper to be maintained by the
Transporter and which shall record the volumes of Gas from time to time held in the pipeline by the Transporter for the account of the Shipper
• Entry Point A Gas producer’s outlet flange along the Pipeline at which Gas can
be delivered into the Pipeline
Includes any other agreed entry point on the Pipeline for delivery of Gas into the Pipeline
This may be the same as the Delivery Point under the GSAA
• Exit Point Point where the outlet flange of the Pipeline is connected to the
Shipper's facilities
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Nominated Quantity The quantity of Gas which has been nominated or deemed nominated
by the Shipper for delivery by the Transporter at the Delivery Point
Reserved Capacity Capacity in the Pipeline which the Transporter reserves, and makes
available to receive Gas from the Shipper at the Inlet Point, transport and deliver the received quantities of Gas to the Shipper at the Delivery Point
Freed Capacity The amount of capacity in the Pipeline by which the Reserved
Capacity is reduced in accordance with any Capacity Reduction Notice
Lost Gas The quantity of Gas received by the Transporter at the Inlet Point but
not delivered to the Shipper at the Delivery Point
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Execution Date
Effective Date
Start Date
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Shipper
• Evidence of creditworthiness and ability to fulfill payment obligations
• Execution of Gas Purchase Agreement
• Execution of Allocation and Attribution Agreement
Transporter
• Approvals to transport Gas• Execution of Entry Point Tie-in Agreement with Gas
Producer.
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To receive and take delivery of Gas at inlet point
Transporter will not be obliged to receive Gas where:
the safe operating pressure of the pipeline will be affected; or
the failure of the Shipper to take delivery of Gas at the Exit Point might adversely affect the interests of any other customer
To transport through the pipeline and deliver at Exit Point the volumes of Gas from the Shipper's Stock Account required to meet each Nominated Quantity aggregate of such Nominated Quantities for a Day should
not exceed the Reserved Capacity for that Day
no obligation to deliver where nominated quantity will result in a less than zero balance in the Shipper's Stock Account
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• To deliver Gas above Nominated Quantity on a reasonable endeavour basis where Shipper makes a request
No obligation to deliver where the excess volume requested will result in a less than zero balance in the Shipper's Stock Account
• Maintain Shipper's Stock Account The designated account of the Shipper to be maintained by
the Transporter and which will record the volumes of Gas from time to time held in the pipeline by the Transporter for the account of the Shipper
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• Title to transported Gas remains with Shipper at all times
• Custody and risk of loss passes to Transporter at the Inlet Point
Passes back to Shipper at the Exit Point
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Any quantity of Gas received by the Transporter at the Delivery Point which is not delivered to Shipper shall be considered to be Lost Gas
Transporter will pay the Shipper the Lost Gas Price in respect of any quantity of Lost Gas
Lost Gas will not include Gas not delivered:
as a result of Force Majeure
as a result of any act or omission of the Shipper
due to Maintenance
during the Commissioning Period
as a result of Shipper's failure to make payment as and when due
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Shipper is expected to pay for and reserve Capacity in the pipeline.
Transporter shall on each day make available
and provide Shipper the capacity paid for the
Transportation of Shipper’s gas to exit point.
Capacity Charge:
Commodity Charge Overrun Charge
Send or Pay:.
Transporter at the end of each contract month shall issue an invoice to Shipper containing the applicable transportation charge, nominated quantity, delivered quantity, adjustments, taxes etc.
Shipper baring any dispute, pays the full invoiced amount within 15 working days of receipt of the invoice.
• Shipper is required to provide and maintain a stand by Letter of Credit (LoC) or such other security specified by the Transporter
Amount of security to be equivalent to total tariff payable by the Shipper for twelve months as estimated by Transporter
Amount may be increased if Shipper increases Annual Capacity Reservation
Transporter entitled to draw down on the LoC where Shipper fails to pay amount due
Shipper to replenish LoC to original amount within time specified in the Agreement (45 working days)
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Quality and Specification of gas is agreed upon by parties and made part of the agreement.
Both Shipper and Transporter have obligations to ensure that gas entering and exiting the pipeline conform with the agreed specification.
Liabilities for off-spec gas exists for both Transporter and Shipper depending on circumstances provided in the GTA.
• Nominated Quantity - Quantity of Gas nominated by Shipper for delivery within a Nomination Period
Shipper to give a daily notice in respect of each Nomination Period for the next Day
Aggregate of the Nominated Quantities specified in a Daily Notice shall not be less than an agreed quantity and shall not be greater than the Reserved Capacity for that Day
• Shipper is required to provide a good faith best estimate of its hourly, weekly and monthly estimates of Gas
• Where Maintenance Notification has been given, the aggregate of the Nominated Quantities in respect of that day shall not exceed the reduced Reserved Capacity
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• The quality, quantity, delivery pressure and heating value of Gas is to be measured and calculated at each Entry Point and at the Exit Point
Shipper responsible for measurement at Entry Point
Transporter responsible for measurement at Exit Point
• Parties to grant each other free access to facilitate monitoring of Gas quantities and Gas quality
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• Remedies in the agreement are exclusive and exhaustive
• No liability for Consequential Losses
• Cap on total cumulative liability
Liability cap does not apply to:
losses caused by Willful Misconduct
personal injury or death
Indemnified party to mitigate losses which would otherwise be recovered
• Reasonable and Prudent Operator Standard to be used19
• FM Events: Acts typically beyond the control of the parties and which excuses them from any legal responsibility or liability
• They include: Acts of God
Acts or serious threats of war, riots, insurrection, terrorism, etc
Strikes, lock outs or industrial disturbances
Pollution, chemical or radioactive contamination
Damage to/loss of/inoperability of Shipper’s/Transporter’s Facilities other than breakdown/failure caused by normal wear and tear or failure to maintain equipment
Acts or omissions of a Government Authority or modification/removal/delay of an authorisation
Gas Producer
Collapse of the Electricity Transmission System
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• Where due to force majeure, Transporter is unable to provide transportation services, Shipper may enter into an agreement with another Transporter for the anticipated duration of the force majeure
• Where due to force majeure, Shipper is unable to input Gas at Entry Point or take Gas at the Exit Point, Transporter may enter into an agreement with a third party to use Shipper's Reserved Capacity for the duration of the Force Majeure
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Termination events include the following: Delivery of agreed gas quantity equal to the Total
Contract Quantity 10th, 15th, 20th anniversary of the start date as parties
may agree Expiration or termination of transporter’s licence to
provide transportation services under the Granting Instrument.
Expiration or termination of Shipper’s licence or right to procure gas under the Granting Instrument.
Operation of law Insolvency Prolonged force majeure Abandonment of pipeline etc
Expert determination: whenever the agreement says an expert should be called upon.
Amicable resolution by parties. Arbitration in accordance with any law
agreed upon by the parties.
Some general provisions in the GTA include the following:
Confidential information Insurance Waiver Amendment Affirmation Severability Disclaimer Further assurances Change in law Entire agreement etc.
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