Course description
This course will give you a deeper understanding of the contractual issues as well as risks and how to mitigate them. It will also help to reduce the time (and money) spent on negotiations. The main focus of the course will be on large pipeline international sales and purchase agreements but it will also include their relationship to other contracts in the pipeline gas chain. In particular, it will consider how the risks and contractual provisions change as the contracting parties change along the gas chain from gas field to end-users such as electric power generators, chemical and fertilizer plant.
Using a case study, participants will be able to practice their negotiation skills and knowledge gained from the course as well as test their understanding of the contractual issues involved.
Relative newcomers to the natural gas sector are welcome to join the course but maximum benefit will be obtained by those participants with a good understanding of how the gas industry operates or have attended the NG3 course: The Gas Chain Concept - Industry Structure, Economics, and Pricing
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Suitability
- Commercial and technical personnel involved in all forms of natural gas activities, both national and international, wishing to deepen their understanding of natural gas sales and purchase agreements and their negotiation.
- Personnel from government, regulatory and fiscal authorities who wish to widen their knowledge of contractual and commercial issues in gas agreements
Content
Commercial Aspects of Contracts
- Role of the contract in financing new projects
- Establishing the relationship between buyer and seller
- Managing risk along the gas chain
- Price revision mechanisms; relating gas price to alternative fuels
- Quality and metering issues, particularly related to price, invoicing and pipeline transmission
- Some references will be made to LNG projects, LNG sales and purchase contracts and how they differ from the corresponding pipeline gas contracts and projects
- Impact of liberalisation and regulation
Elements of a Gas Contract
- The parties and place of incorporation
- Contract terminology and definitions of terms used
- Applicable law
- Dedication of reserves
- Nomination procedures
- Dispute resolution, appointment of expert, arbitration, Force Majeure
- The major issues in contracts; price, volume, duration
- Volume, quantity (DCQ/ACQ), nomination procedures, take or pay provisions, carry forward and makeup gas
- Pricing structures, pricing revision/review and price break
- Warranties and indemnities
- Non performance
- Default provisions and Force Majeure
- Dispute settlement; arbitration; cancellation provisions
- Evolution of Gas contracts
- Master Sales Agreements
Negotiating Skills
- The process of negotiation
- How to achieve an agreement that is acceptable to both sides
- Planning, target setting, tactics
- Cultural aspects of contract negotiation
- Verbal and non verbal communication
- Logistics and timing of information
The Negotiating Process in Practice
- Simulated Gas Contract Negotiations
- Preparation for real negotiations
- Analysing the managements brief
- Setting out the negotiating strategies
- Seeking information and responding to the other partys demands
- Understanding the objectives of the parties in the negotiation
- Responding to changes in the negotiating brief
- Reconciling the differing demands of buyers and sellers
- Closing gaps between the parties
- Maintaining the win
- win relationship
- Closing the deal