Types of gas sales agreements (GSAs)

Contracts for the sale of gas may take several forms, including:

1. •

   term agreements—which provide for the sale and purchase of gas for a defined period and are generally classified as either short-term (one to five years) or long-term (often with a twenty-year term, but may include much longer terms);

2. •

   supply-based contracts—under which the seller commits to deliver specified quantities of gas to the buyer with a degree of flexibility in terms of the source of supply. The degree of flexibility is a negotiated item and a broad right may entitle the seller to source gas worldwide, limited only by Compliance with international Sanctions to which the buyer is subject; and

3. •

   depletion-based contracts—which, in contrast is based on an unspecified amount of economically recoverable reserves from a nominated gas field. A true depletion-based contract will remain in place for the life of the field, such that the scope of the agreement is limited by such reserves rather than by time.

Parties may also implement a hybrid supply contract and depletion