Long-Term and Short-Term Export Contracts for Natural Gas Supply

Abstract

Natural gas is exported in accordance with the terms and conditions of foreign trade contracts between the seller and the buyer. Research into the execution procedure, terms and conditions of such contracts has both theoretical and practical value. The importance of a foreign trade contract for relations between the parties cannot be overemphasized as its scope determines and legally binds the parties for the achievement of their respective goals. When entering into foreign trade contracts, the parties should consider the impact of natural gas extraction, processing, transportation, storage processes on terms of foreign trade transactions with natural gas. These terms are especially important for long-term natural gas export contracts which are considered to be the traditional form of natural gas trading. However, more recently, forms of foreign trade contracts for natural gas export used to interact with foreign buyers have become more diversified. Natural gas trading under short-term contracts using electronic trading platforms is becoming increasingly important. In this article, the author examines the key peculiarities of such contracts, defines basic advantages and disadvantages of using various contract forms for natural gas export.