Meaning Of Gas Tolling Agreement

It is essential that the provisions relating to repeal and planning conditions (including port use agreements or conditions of use), the measurement method and the allocation of LNG and other by-products to all toll operators who share common facilities (common facilities include LNG reservoirs and by-products) are consistent. , walkways, lifting arms and associated equipment). Clear, non-discriminatory allocation procedures and measurement principles to accurately determine the right of each toll booth to the removal of LNG and by-products are important not only for project participants, but also for financiers. The allocation procedures and evaluation method should apply equally to all parties to the toll and be reviewed by all parties using common or common facilities, or be appointed by experts. The lifting, measurement and allocation conditions are often incorporated into the toll agreement; However, it is not typical that these conditions are incorporated into a separate agreement signed by all the parties to the toll, which facilitates the flow of information, among other things, for the development of the supply plan for supply of gas, the annual LNG lifting program, the allocation of LNG and by-products, the standards and inspections of ships, and the determination of liability. An agreement whereby a party holds (and carries) the entries and exits of a trial, as well as the rights to part of the process`s capacity (the super). Another party undertakes to manage the process or installation and collects a toll per converted entry unit or unit of capacity on which fees are granted (the toll). As part of a toll agreement for LNG, a company sends a volume of input gas to a liquefaction plant, with the gas being liquefied against a predetermined toll. In August 2014, Duke Energy Corporation (Duke) and Calpine Corporation (Calpine), a competing wholesale electricity seller in Florida, agreed to Duke`s purchase of the Osprey Energy Center (Osprey) in Florida. The structure of the proposed transaction included a toll agreement that entrusted Duke with responsibility for determining the energy to be produced at BeiOsprey and for purchasing the fuel needed to produce that energy. Essentially, the toll agreement allowed Duke to take operational control of the Osprey plant and limited Calpine`s role to “the mechanical operation of the Osprey facility in accordance with Duke`s instructions.” [1] Toll systems are complex and critical elements of the structure of the LNG project.

The mechanism for allocating LNG to project participants and monetizing their gas rights is incorporated into the toll and cancellation agreement. Continuity of toll agreements between different toll partners using joint or common facilities is an essential element in structuring the toll portion of an LNG project. The structuring phase is essential and decisions taken at an early stage will guide the negotiations and advance the approach to documentation. Although such toll agreements, including provisions that give buyers control over production, are increasingly common in purchasing Energy inbuver Osprey and have had no justification regardless of the transaction. [3] Indeed, the toll agreement was to expedite FERC`s authorization for the transaction by allowing Duke to prove that it “already controls” Osprey, so that “no new damage could be caused by the direct acquisition of Duke Osprey.” [4] While lenders may require different forms of security, a guarantee on the source of revenue from the sale of LNG and by-products is essential not only for banks, but also for other project participants.

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