LNG

Saeid Mokhatab and David Wood

There is a distinct contrast between two prevailing LNG trading alternatives: 1) the traditional, risk-averse, long-term contract-dependent with a floor price and tough take-or-pay terms; 2) the free market, short-term and long-term trading terms with prices indexed to a volatile gas market benchmark price.

These trading alternatives - result in a quite different balance of risks and rewards among the parties in each case.

Long-term contracts give sellers the assurance that they have defined and secure outlets for substantial volumes of gas at prices usually indexed to market prices for competing fuels.

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