Take or Pay contracts, briefly ToP contracts, are contracts between producers and bulk purchasers in the gas economy with long running times of up to 25 years. Contents are usually only roughly well-known.

In the contracts the producer commits itself to supply gas up to a certain annual quantity. The buyer commits itself to pay a fixed quantity independently of whether he also actually inquires this quantity. Due to that very long running times are usually agreed upon no firmly determined prices. Instead price adjustments are made or specified conditions for Nachverhandlungen. The determination of the price takes place thereby frequently via a so-called Netback calculation. The Netback market value for a specific customer group is calculated at the point of import by the lowest price of a competitive source of energy (e.g. the prices for crude oil, fuel oil, coal) less the costs of transport, storage, measurement, taxes etc. of the development of the weighted, average Netback value of all gas customer groups results in the sliding-price clause of the gas import contract.

By this kind of the price structuring, which orients itself at the prices of competitive sources of energy, as high an extent of utilization of the pipeline infrastructure as possible is guaranteed. Besides this price structuring leads to a special Risikoallokation between producers and importers. The risks of the gas economy lie on the one hand in the development of the prices of competition sources of energy and on the other hand in a general market risk, which results by unexpected business fluctuations, changes of the preferences as well as from technical developments and from the competitive situation between the enterprises of the gas economy.

By the passing on of price fluctuations of the competitive sources of energy to the producers these carry the price risk, while the importers carry the quantity risk by changed market conditions. This quantity risk could be reduced in the past still additionally, as the entrance to the transportation and distribution networks in a certain supply area could be completely refused only to a certain enterprise openly and third. The importers could prognosticate so the demand resulting on a long-term basis relatively surely and reduce their quantity risk. By the introduction of a gas gas competition or a so-called Third party ACCESS (i.e. the opening entrance to the transportation nets for third) this possibility is void however (at least partly), since the entrance stands third then to a supply area openly. The existence of ToP contracts seems posed thereby in question.

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• Financial dictionary: Take-or-pay contract
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