Unocal Global Trade said it signed a 10-year gas sales agreementto supply 72 Bcf of gas to the Public Energy Authority of KentuckyTrust (PEAK), a Kentucky municipal joint action agency. PEAK hasagreed to make a nonrefundable advance payment of $120 million onJan. 1, 1999 and pay a fixed monthly reservation fee over the lifeof the contract.
The contract calls for Unocal Energy Trading, another UnocalCorp. subsidiary, to deliver 23 MMcf/d during the winter season and17.5 MMcf/d during the summer to PEAK through Texas GasTransmission.
Although the gas will be initially sold on a fixed-price basis,Unocal Global Trade and PEAK both plan to execute matched financialswaps that will convert the fixed price to a market-sensitive indexpricing structure, according to William T. Wilson, president ofUnocal Global Trade. “This eliminates long-term market fixed-pricerisk for both parties.”
PEAK Chairman Gerald Ballinger said deals like this one are hardto find in today’s energy market. “Our relationship with UnocalGlobal Trade will help us manage that volatility and securereliable, long-term gas supplies at competitive prices-whichtranslate directly into customer savings.” PEAK provides gas andrelated services to the cities of Carrollton and Henderson, KY.
Unocal Global Trade was formed in September 1997 to consolidateUnocal’s worldwide crude oil and natural gas commodity tradingactivities. So far this year the company’s gas sales have averaged1.6 Bcf/d in North America and about 200,000 bbl of oil worldwide.
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