If you`re in the oil and gas industry, you may have come across the term „gas tolling agreement”. This is a type of contract in which one party, typically the gas supplier, agrees to provide gas to another party, typically the gas processor or toller, who then processes the gas and returns it to the supplier in a different form.
In simpler terms, a gas tolling agreement is a deal between two parties where one party provides the raw gas and the other party processes it into a different product. This agreement is often used when the gas supplier lacks the necessary equipment or expertise to turn raw gas into a usable product.
For example, a gas supplier may have access to natural gas but lacks the infrastructure to process it into liquid natural gas (LNG). In this case, they may enter into a gas tolling agreement with a gas processor who has the necessary equipment and expertise to process the raw gas into LNG. The processor would take a fee for their services, which would be paid by the supplier.
The terms of a gas tolling agreement can vary depending on the needs of the parties involved. Some common terms include the quantity and quality of the raw gas to be supplied, the processing fees and payment terms, and the duration of the agreement.
One of the benefits of a gas tolling agreement is that it allows gas suppliers to access new markets without the need for significant capital investment. For processors, these agreements can provide a reliable source of revenue and help them to better utilize their processing facilities.
In conclusion, a gas tolling agreement is a type of contract that allows gas suppliers to get their products processed by a third party who has the necessary equipment and expertise. It can be a win-win situation for both parties involved, as it provides suppliers with access to new markets and processors with a reliable source of revenue.
