Gas Pricing Disputes - Practical Tips from the Frontline Part 1
The European gas market has experienced a 'perfect storm': an increasingly liberalised market has seen an increase in gas supply (resulting from, amongst other things, the increasing availability of renewable/alternative sources of energy) and, in some sectors at least, declining demand (largely as a consequence of the prevailing economic climate). The consequent pressure on prices in the market has placed strain on gas supply contracts under which price is typically set by reference to an oil-linked gas pricing formula, gas prices having decoupled from the oil price which no longer provides a relevant benchmark. In order to weather the storm, gas companies have sought to take advantage of contractual price review mechanisms about which there have been a number of disputes. There has been an increase in the number of arbitrations on these issues and a number of multi-million euro arbitral awards have been made.
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