What is a take-or-pay gas contract?

Under the take-or-pay clauses, the customer – buyer of a supplier/seller is required to either pay the price corresponding to certain pre-agreed quantities of natural gas and offtake said quantities or pay their corresponding price regardless of whether it purchases them.

What is the difference between take pay and take pay?

Buyer-seller agreement where (unlike in a take or pay contract) the buyer’s obligation to pay is not unconditional, but is contingent either upon the delivery of purchased goods or services or upon the buyer’s consent to take the delivery.

What is a take-or-pay commitment?

A take-or-pay clause is essentially an agreement whereby the buyer agrees to either: (1) take, and pay the contract price for, a minimum contract quantity of commodity each year (the TOP Quantity); or (2) pay the applicable contract price for such TOP Quantity if it is not taken during the applicable year.

What is a payment provision?

More Definitions of Payment Provisions Each Note payment (other than final payment in full of the Note) made by check drawn on a bank other than the Bank shall be credited to the Note on the business day that funds are deemed to be available under applicable federal law.

How do take-or-pay contracts work?

Take or pay is a type of provision in a purchase contract that guarantees the seller a minimum portion of the agreed on payment if the buyer does not follow through with actually buying the full agreed amount of goods. Take or pay provisions can commonly be found in the energy sector, where overhead costs are high.

What is considered liquidated damages?

What Are Liquidated Damages? Liquidated damages are presented in certain legal contracts as an estimate of otherwise intangible or hard-to-define losses to one of the parties. It is a provision that allows for the payment of a specified sum should one of the parties be in breach of contract.

What is an offtake contract?

The offtake agreement is the agreement pursuant to which the off-taker buys all or a substantial portion of the output from the facility and provides the revenue stream supporting a project financing.

What is off taking?

1 : the act of taking off: such as. a : the taking off or purchase of goods. b : the amount of goods purchased during a given period.

How do you calculate liquidated damages?

In order to determine a per diem liquidated damage amount, MWRA then divided each contract’s proportionate share of the extended costs by an estimate of how long each contract would take to perform.

What is a take-and-pay LNG contract?

One of the two alternative contract structures common in the LNG industry is a take- and -pay contract structure, which has recently emerged as the typical structure for many of today’s spot and portfolio LNG sales. [5]

What is a take-or-pay clause in natural gas contracts?

In the US, the clause already applied in natural gas contracts in the 1960s aiming to balance the trade relations between producers and pipeline management companies. Take-or-pay clauses ensure that the buyer will not and may not use the contract to withhold natural gas quantities without the obligation to compensate the seller.

What are the rules for long-term gas supply contracts?

The main rule applied by the commission for gas supply contracts was defined in the 2007 Distrigas decision: Long-term gas supply contracts are not per se prohibited, but their impact must be appreciated on an individual ad hoc basis, in order to determine whether they restrict competition to an unacceptable extent.

Are take-or-pay gas contracts subject to EU competition regulations?

Take-or-pay conditions, as part of long-term gas supply contracts, may fall within the ambit of the European Commission policies regarding market foreclosure and/or restriction of competition in the Common Market.