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
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.
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