Select Page

Lng Lifting Agreement

Global demand for natural gas and high reserves resulting from the COVID crisis have disrupted international LNG markets. The price spreads of U.S. LNG exports, which were well above USD/MMBtu two months ago, disappeared and even swung into the negative, with the NBP and Dutch FTT price indices – and, for a short time, the Asian JKM index – trading for the first time since the beginning of LNG exports to the United States in early 2016, under the US benchmark Henry Hub. Despite non-economic price differentials, freight increases in the United States have slowed only moderately. This is expected to change in the coming months, as both Cheniere Energy and Sempra have confirmed cancellations or changes to the lifting plans of some customers and other terminal operators are likely to be subject to the same pressure. However, many U.S. cargoes will continue to move, regardless of price. What is the cost-effectiveness of the cancellation compared to the removal of a cargo apparently derived from money? Today, we are beginning a short series of studies on the factors that influence U.S. LNG load readings. Continuity in project agreements should be both in content and terminology.

The most critical is that the toll agreement will likely reflect certain conditions agreed with LNG buyers in the SPAs, especially when the LNG buyer arranges transportation and adopts LNG at LNG export facilities. For example, port terms of use, which apply to liability and procedures (sometimes called terms of use) and requirements for notification of approaching vessels, restrictions on the delivery of documents and access to facilities and other documentary interfaces, require a high degree of consistency in both the toll agreement and the ARS. It is likely that LNG buyers will need continuity and that continuity will allow the taxpayer to fulfill its obligation to sell under the GNP. The choice of legal provisions and dispute resolution rules should be uniform in the documentation of projects and in the various toll agreements. If there were to be a dispute within the framework of the toll agreements, it is very likely that several parties, if not all, using the same common or common facilities, will be affected. The dispute resolution process is streamlined and more effective when all parties to the dispute are involved in the same dispute resolution process. Experts are often used as a dispute resolution option when technical or financial disputes arise. Again, these provisions cannot be available without continuity between dispute agreements if not all parties are subject to the same dispute resolution and expert provisions. As part of the development of the annual delivery program and the 90-day schedule, project participants must also agree on conditions for or implementing changes to the annual delivery program and procedures for assigning surplus records on a ratible and fair basis. The cooperation and agreement of all project participants is essential for this planning process.