The document outlines the legal and commercial aspects of gas storage facilities, which are vital for balancing natural gas supply and demand, ensuring availability during peak periods, and stabilizing prices. It details the types of gas storage, including underground and above-ground facilities, and describes various service contracts and their importance in risk management and operational flexibility. Key elements of these contracts include capacity, fees, and penalties, essential for effective supply management.

1. Gas Storage Legal and
Commercial Issues
[For Non Engineer]
Sampe L. Purba

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Gas Storage Facilities – definition
•Gas Storage Facilities are infrastructures used to
store natural gas for later use.
•Crucial in balancing supply and demand,
ensuring that natural gas is available during peak
consumption periods, such as in winter, or when
there are disruptions in supply.
•The stored gas can also help stabilize prices by
mitigating the effects of market fluctuations.

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Type of Gas Storage Facilities
• Underground Storage Facilities
ÞDepleted Gas Reservoir infrastructure and geological
condition relatively known
ÞAquifers  Water-bearing formation, Need more infrastructure
ÞSalt Caverns injecting water to underground salt formation.
Good for short term supply management
• Above ground Storage Facilities
LNG storage, natural gas cooled to -162C, reducing volume 600
times

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Function of Gas Storage Facilities
Supply Securities
Price Stabilization
Operational Flexibility
Seasonal Demand Management

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Gas Storage Service Contracts
Agreements between a gas storage facility
operator and customer [gas producer, utility
company, or trader]
Functioning to managing the logistics of
storing, withdrawing, and injecting natural
gas

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Type of Gas Storage Services
Baseload Storage  constant supply,
regular demand
Peaking Storage  to meet sudden spikes
in demand
Balancing Storage  managing short-term
fluctuation in supply and demand

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Importance of Gas Storage Services
Contract
• Supply Reliability  handling disruptions
• Market participation  gas traders and supplier portfolio
management
• Risk management  mitigate risk against supply
shortages, price volatility and operational issues

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Key Elements of Gas Storage Service Contracts
• Contract types [Firm, Interruptible, Seasonal]
• Capacity and deliverability [Storage capacity, injection and withdrawal
rate]
• Fees and Charges [capacity charges, injection/ withdrawal charges,
commodity charges]
• Contract duration
• Balancing and Penalties [imbalance charges, make-up rights]
• Operational Flexibility
• Force majeure and Liability

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References
•Peter Roberts https://www.amazon.com/Gas-LNG
-Sales-Transportation-Agreements/dp/041411129
X
•The Law and Business of LNG, Paul Griffin, 2012
•Energy Economics, Concepts, Issues, Markets
and Governance, S.C Bhattaacharyya, 2011
•Sampe Purba – www.slideshare.com

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