LNG sale and purchase agreements


Produced in partnership with Shakespeare Martineau LLP
Practice notes

LNG sale and purchase agreements


Produced in partnership with Shakespeare Martineau LLP

Practice notes
imgtext

Types of LNG sale and purchase agreements

Liquefied natural gas (LNG) is commonly traded as a portfolio commodity, in which a participant may break up several long-term sales agreements into short-term transactions to optimise transport Costs and balance supply obligations with market conditions. The LNG industry also maintains its own spot-trading market, in which cargoes are bought and sold through competitive tenders and brokered trades. Alternatively, swap arrangements (under which two buyers or two sellers agree to swap cargoes) is another trading model becoming more common in the LNG industry.

The common types of LNG sale and purchase agreements are:

  1. •

    short-term sales agreements—one to five-year bilateral agreements, often with little flexibility of terms

  2. •

    master agreements—a popular arrangement under which seller and buyer sign an agreement that sets out the general terms under which they will buy and sell LNG, without committing the parties to an obligation to actually buy or sell specific quantities. When the parties wish to transact, they will complete a supplementary ‘confirmation notice’, deemed to include the general terms of the master agreement

Powered by Lexis+®
Jurisdiction(s):
United Kingdom
Key definition:
LNG definition
What does LNG mean?

Liquefied natural gas (LNG) can be defined as meaning any combustible hydrocarbon or mixture of hydrocarbons consisting primarily of methane and including other combustible and non-combustible gases in a gaseous state which are in a liquid state at or near atmospheric pressure at sea level. LNG is a form of processed natural gas; through the process of liquefaction it is transformed into a liquid which enables it to be transported to its destination where the liquid is regasified for sale.

Read more

Popular documents

Key stakeholders in midstream & downstream activities of the Oil & Gas industry

Key stakeholders in midstream & downstream activities of the Oil & Gas industryAlthough differences persist among regional markets, this Practice Note explains that the traditional conception of ‘key stakeholders’ may be opening up to a greater diversity of interests, including ‘non-financial’

Knock-for-knock indemnities: risk allocation in offshore energy contracts

Knock-for-knock indemnities: risk allocation in offshore energy contractsWhat are knock-for-knock indemnities?A knock-for-knock clause is a reciprocal agreement to apportion liability for certain losses (usually, death or injury to personnel and damage to property) between contracting parties,

An introduction to tolling agreements in the LNG sector

An introduction to tolling agreements in the LNG sectorIntroductionThe business model underpinning a liquefied natural gas (LNG) project is of fundamental importance since this will determine the risk profile of the project as a whole and consequently, the type of financing that will be required.

Joint study and bid agreement

Joint study and bid agreementIntroductionA joint study and bid agreement (JSBA) is a contractual arrangement commonly utilised in the oil and gas industry where a number of parties are considering submitting a joint bid for a petroleum agreement.Typically, international oil companies are offered oil