Gas Price Disputes Under Long-Term Gas Sales and Purchase Agreements

• John Trenor
• 7.16.2018

John A. Trenor has authored a chapter in the seventh edition of The Energy Regulation and Markets Review, first published in June 2018 by The Law Reviews.

Excerpt: Global production and consumption of natural gas has more than doubled since the early 1970s. A significant portion of this increased demand for natural gas is supplied pursuant to long-term gas sales and purchase agreements (GSPAs). Under these long-term contracts, gas is imported from gas exporting states into many countries in Europe, Asia, South America, and elsewhere, either transported via pipeline or shipped as liquefied natural gas (LNG). Over the past decade, there have been a growing number of disputes between the parties to such agreements regarding the price to be paid for gas supplied thereunder. This increase in price disputes shows little sign of abatement. This chapter explains some of the key elements often seen in long-term GSPAs (including price review mechanisms), some of the recent market developments that may have contributed to the substantial increase in gas price disputes, and some of the issues of contention between parties that may arise in these disputes. In addition, there are comments on the possible future of gas price dispute resolution.