Industrial Gas Commercial Advisors (IGCA) offers consulting services for the purchase of new requirements of industrial gases, or with assistance with an existing product supply agreement which isn’t performing as expected (see the “Expert Witness” section).
We specialize in on-site and merchant agreements, and offer expertise in products such as oxygen, nitrogen, argon, hydrogen, carbon monoxide, syngas, CO2 and CDA. Our founder, John Peterson, has over thirty-five years of experience in drafting and administrating product supply agreements covering buying, selling and product swap arrangements.
With respect to new requirements, use IGCA for assistance in defining the initial requirement and its mode of delivery, selection of the specific industrial gas supplier, and negotiation of the PSA, as discussed below.
When determining the most reliable and cost-effective method in which to purchase industrial gases, it is important to understand that several delivery options should be considered. Industrial gases are typically categorized in this fashion, that is, by mode of delivery. For large atmospheric gas requirements, the three major categories are pipeline or on-site, merchant (or bulk) and standard plants (such as a membrane, molecular sieve or small cryogenic air separation facility).
As an example, assume an oxygen supply is required for the production of a common petrochemical product. To determine the best method of industrial gas supply, the potential customer should consider numerous variables such as:
1. Quantify of the oxygen needed, in terms of the monthly need and the instantaneous flowrate
2. Minimum purity requirements of the oxygen supply, and the ramifications of purity fluctuations
3. Reliability requirements of the supply, and the consequences of a temporary loss of oxygen flow
4. Pressure requirements for the oxygen supply, and what pressure fluctuations are acceptable
5. Value of byproducts (such as nitrogen) which may be available from the industrial gas supplier, depending upon the mode of supply selected, and
6. Site infrastructure requirements, such as plot size and utility availability, for the on-site mode of delivery evaluation
Each one of the above factors involves a set of tradeoffs which impact the cost and reliability of the oxygen supply, and ultimately determine the delivery option to seek from the industrial gas supplier. And, each variable needs to be addressed contractually.
After determining the preferred mode of supply, let IGCA assist in developing the RFP (request for proposal) to solicit input from the appropriate suppliers. IGCA’s industrial gas consulting services may be utilized to develop and evaluate proposals, economically evaluate various proposal options, and to work with the industrial gas supplier to find integration opportunities between the supplier and customer facilities.
When the mode of supply and potential supplier(s) are identified, use IGCA as your industrial gas consultant during the negotiation of the Product Supply Agreement.
Since such agreements, particularly for large requirements, typically specify long terms, it is exceedingly important to ensure that the PSA remains balanced, and mechanisms exist to address potential issues whenever they arise during the agreement.
Some of the key contractual clauses to focus on during PSA negotiation, such as pricing & pricing escalation, requirements, renewal and dispute resolution are discussed in our video in the “About Us” section of the website.