Norton Rose Fulbright advises on LNG SPA

Thursday, 26 November 2020
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Law firm Norton Rose Fulbright has advised Pavilion Energy Trading & Supply regarding the world’s first LNG sale & purchase agreement (SPA) with carbon neutral ambitions.

Temasek subsidiary Pavilion Energy and QP Trading (Qatar Petroleum) announced a 10-year LNG SPA for the supply of up to 1.8 mill tonnes per annum of LNG to Singapore from 2023.

Each LNG cargo delivered under this agreement will be accompanied by a statement of its greenhouse gas (GHG) emissions measured from well to discharge port.

In 2019, Norton Rose Fulbright advised Pavilion on its acquisition of Iberdrola’s LNG and natural assets.

Partners Ben Smith (Singapore) and Andrew Hedges (London) led the team advising Pavilion Energy and were supported in Singapore by associate William Holmden and the firm’s legal process and the technology team in Newcastle.

The firm provided advice on the structuring and terms of the procurement exercise and supported the negotiation of the LNG SPA once Qatar Petroleum was short listed. The procurement process utilised an online IT platform through which potential bidders were asked to bid on a term sheet, noting the key terms of their bid and any divergences from the bid documentation online.

This platform kept all the bidders’ submissions secure, and kept a full record of all documentation that was submitted. Any access to the documentation was also secured, giving greater integrity to the procurement process, which enabled Norton Rose Fulbright to provide Pavilion Energy with analysis of bidders’ proposals in a more efficient and data-led way.

Ben Smith commented: “At a time when the global pandemic was causing many to rethink long term projections, Pavilion Energy was looking for a new way to procure LNG that accurately accounted for GHG emissions associated with the production of the LNG and its delivery to Pavilion Energy. We were happy to support this innovation with a new way of managing the bid process online.”

Andrew Hedges, a climate change and clean energy lawyer, added: “We are pleased to have assisted Pavilion Energy on this landmark agreement. Working on this complex transaction required us to work with the parties to develop new methodologies to measure, report and offset carbon emissions.

“As the low carbon LNG market evolves, it is hoped that the emissions accounting structures that have been developed for this deal may become a widely accepted industry standard, enabling a liquid trading market to develop in the future,” he said.

Norton Rose Fulbright’s Global Co-Head of Energy, Anne Lapierre, said: “Building a sustainable energy future requires more transparency of emissions across the board including in the gas value chain. Green LNG has the potential to play an integral role in the transition to a low carbon future.” 

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