- An important distinction is made between the terms ‘price of gas’ and ‘value of gas’. The term ‘price of gas’ refers to the price of gas under the GSA as determined by reference to the price formula. The term ‘value of gas’ is a relative concept and reflects the fact that under the price formula the price of gas is determined by reference to, and is derived from, the price of other sources of energy, typically oil products.
- The figures 0.5 and 0.25 represent the relative share of each oil product as an energy source in the gas market to which gas is being supplied under a GSA. These figures usually vary from one gas market to another. Therefore, the price of gas under a GSA is calculated as the weighted average of the prices of the oil products included in the price formula.
- High sulphur fuel oil is included in the price formula as the majority of GSAs currently in force still make reference to it despite the fact that it no longer competes with gas since its use is prohibited.
- There are GSAs pursuant to which the price of gas is indexed to the prices of coal or electricity. However, the vast majority of GSAs presently in force index the price of gas to that of oil products.
- Directive 98/30/EC of the European Parliament and of the Council of 22 June 1998 concerning common rules for the internal market in natural gas,://ec.europa.eu/energy/gas/legislation/legislation_en.htm.
- Directive 2003/55/EC of the European Parliament and of the Council of 26 June 2003 concerning common rules for the internal market in natural gas and repealing Directive 98/30/C,://ec.europa.eu/energy/gas/legislation/legislation_en.htm.
- We are not aware of any GSAs that expressly defined how the comparison between the reference dates should be carried out.
Journal of Energy & Natural Resources Law
Volume 25, 2007 - Issue 3: Energy Dispute Settlement