Emerton — Litigation & Arbitration support expertise

Litigation & Arbitration support expertise

Context & Objectives

Context: a price review has been requested by the Client on a long-term gas major supply contract. A first valuation of the contract has been made on a netback approach by an independent expert. Given the huge stake of the PR, such valuation had to be cross-checked and completed by a third-party analysis made by Emerton

Objectives:

Assess the consistency, robustness and accuracy of the valuation model and propose adjustments as the case may be
Provide a quantitative analysis of the European retail markets of the PR: profitability of gas retailers analysis of gross margins, net margins, identification of the price drivers and price references on each market segment

Outcome

Robust, detailed and clear expert report
Very positive issue of the PR for our client

Our approach

External review of the netback value model

Detailed analysis of the whole set of assumptions made on each element of the value chain of natural gas commercialization: supply options and wholesale markets, transmission and distribution, modelling of storage and modulation, gross and net margins, commercial costs, retail gas prices structure and levels per market segment
Identification of risks, proposal of detailed adaptations and fine-tuning of the valuation model
Major improvements of the robustness and reliability of the model

Construction of an expert report on targeted European retail markets

Quantitative analysis of retail market dynamics: market shares of players, HHI index, major supply schemes, competition intensity
Analysis of commercial offers per market segment and final customers’ expectations e.g. direct access to wholesale markets, development of joint purchasing
Detailed quantitative analysis of retail margins and marketing costs per market segment
Role of midstream infrastructure operators

Our experts

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