Gas Purchase Agreement for Nigeria

Gas Purchase Agreement Template for Nigeria

A comprehensive commercial agreement governed by Nigerian law that establishes the terms and conditions for the sale and purchase of natural gas between a seller and buyer. The agreement addresses crucial elements including gas specifications, delivery obligations, pricing mechanisms, and operational procedures, while ensuring compliance with Nigerian petroleum regulations, particularly the Petroleum Industry Act 2021. The document incorporates local content requirements and environmental compliance obligations specific to the Nigerian gas sector, along with detailed technical and commercial provisions for gas delivery and payment terms.

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What is a Gas Purchase Agreement?

The Gas Purchase Agreement (GPA) is a fundamental commercial document used in Nigeria's gas sector to formalize the sale and purchase of natural gas between parties. It is essential for projects involving gas supply, whether for power generation, industrial use, or commercial distribution. The agreement must comply with Nigerian legislation, particularly the Petroleum Industry Act 2021 and associated regulations, while addressing commercial, technical, and operational aspects of gas trading. This document is typically used when establishing long-term gas supply arrangements and includes detailed provisions for gas specifications, delivery obligations, pricing mechanisms, measurement procedures, and risk allocation. The GPA must incorporate local content requirements and environmental compliance obligations specific to Nigeria, while also addressing practical considerations such as gas transportation arrangements and payment security mechanisms.

What sections should be included in a Gas Purchase Agreement?

1. Parties: Identification of the seller and buyer, including their legal status and registered addresses

2. Background: Context of the agreement, including seller's right to sell gas and buyer's intended use

3. Definitions and Interpretation: Detailed definitions of technical and commercial terms used throughout the agreement

4. Sale and Purchase Obligation: Core obligations including Daily Contract Quantity (DCQ) and Take-or-Pay provisions

5. Term and Termination: Duration of agreement, conditions for renewal, and termination rights

6. Gas Specification: Detailed quality specifications for the gas to be delivered

7. Delivery Point and Title: Specification of delivery point and transfer of title and risk

8. Transportation and Nominations: Procedures for gas transportation and nomination processes

9. Measurement and Testing: Methods and procedures for measuring gas quantity and quality

10. Price and Payment: Gas price calculation, payment terms, invoicing, and payment security

11. Force Majeure: Definition of force majeure events and consequences

12. Liability and Indemnity: Allocation of risks and liability between parties

13. Governing Law and Dispute Resolution: Choice of Nigerian law and dispute resolution mechanisms

What sections are optional to include in a Gas Purchase Agreement?

1. Local Content Requirements: Section specifically addressing Nigerian local content requirements, needed if local content commitments are significant

2. Carbon Credits: Provisions dealing with carbon credits or emissions trading, if relevant to the project

3. Gas Flaring Compliance: Specific provisions relating to gas flaring regulations, if the gas source involves associated gas

4. Currency Conversion: Detailed provisions for currency conversion if payments involve multiple currencies

5. Infrastructure Development: Provisions relating to development of delivery infrastructure, if new infrastructure is required

6. Government Guarantees: Provisions relating to government guarantees or support, if applicable

7. Change in Law: Detailed provisions for handling changes in law, particularly relevant in evolving regulatory environments

What schedules should be included in a Gas Purchase Agreement?

1. Technical Specification: Detailed technical specifications for the gas

2. Measurement Procedures: Detailed procedures for gas measurement and testing

3. Price Calculation: Detailed formula and methodology for price calculation

4. Delivery Point Specifications: Technical details and drawings of delivery point

5. Form of Payment Security: Template for bank guarantees or other payment security

6. Nomination Procedures: Detailed procedures for gas nomination

7. Contact Details: List of key contacts and authorized representatives

8. Local Content Commitments: Detailed local content commitments and compliance plan

9. Transportation Agreement: Form of gas transportation agreement if separate from main agreement

Authors

Alex Denne

Head of Growth (Open Source Law) @ Genie AI | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Jurisdiction

Nigeria

Publisher

Genie AI

Document Type

Sale Agreement

Cost

Free to use
Relevant legal definitions
Clauses
Relevant Industries

Oil and Gas

Energy

Power Generation

Industrial Manufacturing

Petrochemicals

Utilities

Infrastructure

Natural Resources

Heavy Industry

Relevant Teams

Legal

Commercial

Operations

Technical

Finance

Risk Management

Regulatory Compliance

Business Development

Project Management

Supply Chain

Environmental Compliance

Relevant Roles

Commercial Director

Gas Supply Manager

Energy Trading Manager

Legal Counsel

Contract Manager

Technical Operations Manager

Risk Manager

Commercial Operations Manager

Business Development Director

Regulatory Compliance Officer

Finance Manager

Project Manager

Operations Director

Technical Director

Energy Procurement Manager

Industries
Petroleum Industry Act 2021: The primary legislation governing oil and gas activities in Nigeria, including natural gas production, distribution, and sales. It provides the framework for commercial operations in the gas sector.
Nigerian Oil and Gas Industry Content Development Act 2010: Mandates local content requirements in oil and gas contracts, including gas purchase agreements, affecting choice of contractors and service providers.
Environmental Impact Assessment Act: Requires environmental impact assessments for gas projects and ongoing environmental compliance obligations that may affect gas supply obligations.
Nigerian National Petroleum Corporation Act: Establishes NNPC's role in the oil and gas sector, important for understanding regulatory oversight and potential stakeholder involvement.
Gas Pricing Policy: Government policy document setting guidelines for gas pricing mechanisms in domestic supply agreements.
Nigerian Gas Transportation Network Code: Governs the operations of gas transportation system and network access, crucial for delivery points and transportation arrangements.
Contract Act: General contract law principles applicable to commercial agreements in Nigeria, governing formation and enforcement of contracts.
Federal Competition and Consumer Protection Act 2018: Regulates competition and fair trading practices, affecting pricing mechanisms and market behavior in gas purchase agreements.
National Gas Policy 2017: Sets out the government's policy objectives for the gas sector, including commercialization and market development frameworks.
Nigerian Gas Flare Commercialization Programme: Regulations regarding gas flaring and requirements for gas utilization, which may affect supply obligations and environmental compliance.
Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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