LNG sales contracts: How we got to where we are now
This article is the first in a three-part series on the evolution of LNG sales contracts. In this issue the author highlights the emergence of take-or-pay and price review clauses
During the more than 40-year history of the LNG industry, customs and practices have developed with regard to documenting long-term LNG sales (“SPAs”).
New entrants spoilt for choice between onshore and offshore LNG terminals
Offshore LNG terminals have been under consideration since the early 1990s, first for export and more recently for import.
Tangible progress is now being made with Excelerate Energy’s US Gulf Gateway project working well and its planned Northeast Gateway off the coast of Massachusetts moving forward in the permitting process.
Terrorism threat raises bar in permit process in US and elsewhere
An offshore liquefied natural gas terminal proposed for Long Island Sound between New York and Connecticut poses safety and security risks that would require more firefighters, escort boats and other measures to prevent accidents or terrorist attacks, according to the US Coast Guard.
In addition to the local opposition to East Coast LNG terminals from citizens, security requirements are also now raising potential obstacles to projects even moving beyond the planning stage.
LNG agreements designed to attract finance
Steven R. Miles, Washington D.C., and Jason K. Bennett, Dallas, Texas
The terms for the sale and purchase of LNG are evolving towards more complex and flexible relationships between suppliers and purchasers which will allow an increasingly global market in the future.
The ever more intricate and dynamic commercial relationships between LNG suppliers and purchasers are typically set forth in Sale and Purchase Agreements, which serve as the foundation for most LNG trades worldwide.
Study focuses on six LNG regasification systems
CB&I of the US has been involved in the design and construction of terminal facilities for LNG for more than two decades. Here their experts consider import plant options
Throughout the world about 20 new liquefied natural gas import facilities are currently being built, while many more projects are in the planning stages in the US, Europe and Asia.
Not only is the number of import terminals growing, but also the size of the planned regasification facilities to meet the increasing need for natural gas.
LNG trading strategies require diverse approaches
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.
LNG carrier owners can consider their options
Looking back over the last 20 years it can be seen that in terms of both the types of trading and the volumes of cargoes being transported the LNG market has come a long way in a short time.
By 2009 the size of the LNG carrier fleet is expected to increase to 300 vessels and by 2011 it is likely to reach 450 vessels.
It is inevitable that with this level of expansion comes innovation and flexibility, not only on the part of the oil and gas companies developing new sources of supply, but also on the part of the LNG buyers in both traditional and emerging markets.
