What Is Take Or Pay Agreement

The energy sector often uses “take or pay” regulation because energy supply requires a significant investment in natural gas, crude oil or other resources. Without this means of assent that they will have some return on their investment, they would have no incentive to spend capital on production in advance. (a) its losses are the consequence of the seller`s failure to offset its deficit by the quantities of natural gas supplied to other customers and any profits from them; When determining the seller`s loss and profit, the profit calculation takes into account all positive adjustments to the selling prices of the quantities of natural gas to the seller of its supplier. .