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Unocal Inks Deal for Advance On 10-Year Contract

Unocal Inks Deal for Advance On 10-Year Contract

Unocal Global Trade said it signed a 10-year gas sales agreement to supply 72 Bcf of gas to the Public Energy Authority of Kentucky Trust (PEAK), a Kentucky municipal joint action agency. PEAK has agreed to make a nonrefundable advance payment of $120 million on Jan. 1, 1999 and pay a fixed monthly reservation fee over the life of the contract. The deal with Unocal follows a similar transaction PEAK negotiated with Marathon for supply this winter.

The Unocal contract calls for Unocal Energy Trading, another Unocal Corp. subsidiary, to deliver 23 MMcf/d during the winter season and 17.5 MMcf/d during the summer to PEAK through Texas Gas Transmission.

Although the gas will be initially sold on a fixed-price basis, Unocal Global Trade and PEAK both plan to execute matched financial swaps that will convert the fixed price to a market-sensitive index pricing structure, according to William T. Wilson, president of Unocal Global Trade. "This eliminates long-term market fixed-price risk for both parties."

Unocal Global Trade was formed in September 1997 to consolidate Unocal's worldwide crude oil and natural gas commodity trading activities. So far this year the company's gas sales have averaged 1.6 Bcf/d in North America and about 200,000 bbl of oil worldwide. Rocco Canonica

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