"The energy market is not just built by straightforward supply-and-demand mechanisms". Various environmental and legal factors shape and influence the overall interplay within this industry, resulting in direct or indirect consequences for all market players. Especially, in the context of contract theories, possible opportunistic behavior of any market player might appear and subsequently, create a market imbalance. The initial legal framework for the natural gas market was developed on short notice to protect the strategic intentions of energy suppliers. However, nowadays, the environment changed significantly, resulting in a possible shift of opportunistic behavior.
Power markets are highly complex. Energy sources, such as oil, coal or natural gas, are the fuel for the world economy. Many market players depend on and try to influence the development of future energy prices, output volumes or distribution infrastructure. To ensure a fair interaction in this industry, trade aspects and related issues are contractually governed. However, while coal and crude oil are well-developed energy sources since centuries, natural gas was considered as possible energy alternative, only several decades ago. Within a very short period, a legal framework for the natural gas market had to be set-up, resulting nowadays in the revision and adjustment of this traditional contract model.
Inhaltsverzeichnis (Table of Contents)
- THE NATURAL GAS MARKET
- KEY FACTS
- NATURAL GAS PRICING
- LONG-TERM CONTRACTS IN THE NATURAL GAS INDUSTRY
- TRADITIONAL MODEL OF LONG-TERM GAS EXPORT CONTRACTS
- UPDATED MODEL OF LONG-TERM GAS CONTRACTS
- EXAMINATION OF THE TAKE-OR-PAY CLAUSE
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This text aims to explore the evolution of the natural gas market and analyze the strategic intentions and potential opportunistic behavior of market players within the context of long-term gas contracts. It focuses on the impact of the Take-or-Pay clause, a key provision in traditional gas contracts, on the market dynamics and the emergence of updated models that address evolving needs and changing market conditions.
- The development of the natural gas market
- The role of long-term contracts in the natural gas industry
- The Take-or-Pay clause in traditional gas contracts
- The evolution of gas pricing mechanisms
- The strategic intentions and opportunistic behavior of market players
Zusammenfassung der Kapitel (Chapter Summaries)
- THE NATURAL GAS MARKET: This chapter provides an overview of key facts and historical developments regarding the natural gas market. It discusses the discovery of the Groningen Gas Field, the emergence of natural gas as an environmentally friendly fossil fuel, and different methods of extraction and transportation. It also explores the evolution of natural gas pricing, from initial reliance on oil-price indexation to the emergence of Gas-on-Gas pricing based on supply and demand dynamics.
- LONG-TERM CONTRACTS IN THE NATURAL GAS INDUSTRY: This chapter delves into the historical context of long-term contracts in the natural gas industry, focusing on their initial purpose to mitigate risks and secure strategic intentions of market players. It examines the traditional model of long-term contracts characterized by long timeframes, oil-indexed pricing formulas, and the Take-or-Pay clause. It then explores the updated model that reflects changes in the market, including shorter contract durations, hybrid pricing systems, and adjustments to the Take-or-Pay provision.
- EXAMINATION OF THE TAKE-OR-PAY CLAUSE: This chapter focuses on the Take-or-Pay clause, a key element of traditional long-term gas contracts. It explains the principle of the clause and its implications for both buyers and sellers, highlighting how it balances volume risks and secures supply commitments. The chapter provides insights into the potential impact of the clause on market dynamics and how its implementation has evolved with the changing landscape of the natural gas industry.
Schlüsselwörter (Keywords)
The primary keywords and focus topics include: Take-or-Pay clause, long-term natural gas contracts, strategic intentions, opportunistic behavior, supply-and-demand, energy, natural gas, pricing, market dynamics, risk allocation, oil-price indexation, Gas-on-Gas pricing, legal framework, environmental factors.
- Quote paper
- Marco Berschneider (Author), 2019, The Take-or-Pay Clause in Long-Term Natural Gas Contracts. Strategic Intention or Opportunistic Behavior?, Munich, GRIN Verlag, https://www.hausarbeiten.de/document/1416356
