Common use of Minimum Volume Commitment Clause in Contracts

Minimum Volume Commitment. Subject to any Force Majeure Event and any Enumerated Circumstance (each as defined below), during each month during the Term (as defined below), PVOG agrees to deliver on an aggregate average daily basis at least 8,000 barrels per day of crude oil pursuant to one of the methods set forth in this Agreement (such amount, the "Commitment"). For the avoidance of doubt, the Commitment shall be determined on a monthly basis. a. In the event that PVOG's aggregate daily deliveries hereunder during any monthly period are less than the Commitment for that month, and no Over-Delivery Credits are then outstanding, then a deficiency (the "Deficiency") shall exist. PVOG will be obligated to pay to Republic an amount for each deficient barrel equal to the Transportation Deduction (such amount, the "Deficiency Fees"). b. Republic shall invoice PVOG monthly for any Deficiency Fees. In the event that PVOG ships volumes in excess of the Commitment in any given month, PVOG shall be entitled to a credit against any Deficiency Fees assessed by Republic in the subsequent twelve (12) months, or any Deficiency Fees paid by PVOG in the preceding twelve (12) months, in an amount equal to the surplus barrels multiplied by the Transportation Deduction (each, an "Over-Delivery Credit"). Over-Delivery Credits shall first be applied to any Deficiency Fees paid by PVOG during the preceding twelve (12) months, and shall be credited during the month corresponding to the applicable Over-Delivery Credit. c. Over-Delivery Credits shall be applied only to volumes shipped in accordance with Article I, Section 2 below in excess of PVOG's Commitment for that month and shall be applied at all times on a first-in, first-out basis, so that the oldest month's Over-Delivery Credit is fully utilized before application of any subsequent month's Over-Delivery Credit. Over-Delivery Credits shall expire if not used by the end of the twelve (12) month period following the month during which such Over-Delivery Credit was created. At the end of the Term, any remaining unexpired or unutilized Over-Delivery Credits shall expire on the last day of the Term and will not be valid for use against any future shipments on KMCC.