What is the T.O.P?

Take or Pay (T.O.P) is a LNG terminology and it indicates that buyer should to pay if he fails in take the pruduct.This mechanism allowes to sellers to facilitate financing the project via minimize the risk and secures the cash flows over the life of project. So unlike the common belief the T.O.P is not the buyer's constraint rather it benefits both sides. Without T.O.P financiers do not intent to investment because of more risk and so with decrease in energy supply buyer should bear the higher price.However T.O.P percentage has been decreased recently but they are still very important and challenging issue in LNG contracts.Anyway buyers try to move T.O.P away from LNG contracts for getting a more flexibility but it seems thay would not success due to tight energy market prospective ahead.