Common use of Valuation of Natural Gas Clause in Contracts

Valuation of Natural Gas. 20.5.1 The Contractor shall endeavor to sell all Natural Gas produced and saved from the Contract Area atArms-Length Sales prices and for the benefit of Parties to the Contract. 20.5.2 Notwithstanding the provision of Article 20.5.1, Natural Gas produced from the Contract Area shall be valued for the purposes of this Contract as follows: (a) Gas which is used as per Article 20.1 or flared with the approval of the Government or re-injected or sold to the Government pursuant to Article 10.5 shall be ascribed a zero value; (b) Gas which is sold to the Government or any other Government nominee shall be valued on the terms and conditions actually obtained including pricing formula and delivery; and (Explanation: However, it is clarified that this provision would apply only when the sale is made to the Government or Government nominee under the provisions of the Contract); and (c) Gas which is sold or disposed of otherwise than in accordance with Para (a) or (b) shall be valued on the basis of competitive Arms Length Sales in the region for similar sales under similarconditions. 20.5.3 So as to ensure that the gas is valued at Arms Length Sales price or where Arms Length Sales price is impossible toarrive at the formula or basis on which the prices shall be determined pursuant to Article 20.5.2