Gas Supply Agreement negotiation support

Jan 30, 2015

Gas traders face a difficult task when negotiating Gas Supply Agreements with their customers as the business imperatives vary substantially from one customer to the next, dictating the price at which gas is a viable energy source for each business. Meeting the pricing levels acceptable to each customer whilst complying with a regulatory framework that prohibits arbitrary discrimination is a significant challenge.

Project Description

We provided analytical, and strategic support in a number of Gas Supply Agreement negotiations between our client (a piped-gas trader) and their customers. We assisted by calculating the possible profit impact of offering customised escalation adjustment mechanisms under uncertain future scenarios, and by quantifying the sensitivity of a customer’s pricing to the pattern-of-use elements of the pricing mechanism under their control. We created innovative mechanisms to facilitate differential pricing for appropriate customers whilst complying with the non-discriminatory requirements of the regulatory environment.