Long-term contracts and market forces in the natural gas market

Journal Article · · J. Energy Dev.; (United States)

OSTI ID:5753391

Canes, M E; Norman, D A

The current problems facing the natural gas industry are somewhat novel to that industry so it is hardly surprising that the renegotiation process is not yet complete. Perhaps the most basic reason for this is that it is difficult to renegotiate the terms of contracts when there is uncertainty as regards the course of events next year. Renegotiating the price terms of contracts to forestall a hypothetical price fly-up (the likelihood of which now appears doubtful) therefore would involve certain costs but as yet uncertain benefits. Nonetheless, if market conditions warrant, there is reason to believe renegotiation will occur (as it has with respect to pipelines' take-or-pay obligations) as information accrues regarding the situation faced by individual pipelines this year and next. Producers and buyers will be in a better position to decide which contracts require adjustments when they know the nature and extent of adjustments required. There are other reasons the renegotiation process is likely to continue. As the number of renegotiations mounts, experience will be gained in dealing with the excess supply problems now confronting the industry.

• Research Organization: American Petroleum Institute, Washington, DC
• OSTI ID: 5753391
• Journal Information: J. Energy Dev.; (United States), Journal Name: J. Energy Dev.; (United States) Vol. 10:1; ISSN JENDD
• Country of Publication: United States
• Language: English

Related Subjects

03 NATURAL GAS
030600* -- Natural Gas-- Economic
Industrial
& Business Aspects
29 ENERGY PLANNING, POLICY, AND ECONOMY
290200 -- Energy Planning & Policy-- Economics & Sociology
294003 -- Energy Planning & Policy-- Natural Gas
CONTRACTS
ENERGY SOURCES
FLUIDS
FOSSIL FUELS
FUEL GAS
FUELS
GAS FUELS
GASES
MARKET
MEDIATION
NATURAL GAS