05.07.2009

Issues regarding sellers failure to deliver nominated quantities of gas. If underliveries were due to FM, then the buyer’s ToP obligation will be reduced by the amount of gas that the seller failed to deliver. If seller cannot claim FM, then the buyer can also impose sanctions for damages caused or demand that the under-delivery be classified as shortfall gas. Shorfall of gas is a seller’s default. If a natural gas seller, on a day, fails to provide the quantity of sales gas nominated by the Buyers and providing that the reason is not the fault of the Buyer or of the Sellers’ Force Majeure or Political Force Majeure effecting any Party, then the Buyer shall be entitled to a quantity of Sales Gas during the next [x] Years equal to the difference between the quantity of Sales Gas properly nominated by the Buyer (excluding for the avoidance of doubt Excess Gas) and the amount actually delivered by the Sellers (the Shortfall Quantity). The Shortfall Quantity will be supplied at a price equal to the prevailing price in the year in which it is supplied times [x%] (the Shortfall Price). Usually a buyer will want to give a seller no more than a 2% operating tolerance as the norm. A buyer should also try to get near to 80% of the Contract Price for the Shortfall Price.

Gina Cohen
Natural Gas Expert
Phone:
972-54-4203480
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