The previously separate regional natural gas and LNG markets have moved closer together and, while the evolution of a global gas price (similar to Brent as a global oil price) is still far away, the growth of integrated platforms and prices and markets is undeniable. What was once the predictable provisions of a long-term LNG sales and sale (SPA) contract and the links in the LNG chain have been largely dismantled in many areas. Long-term sales contracts – usually for a 20-year term – the long-term LNG sales contract remains the traditional guarantee for financing the LNG capital-intensive value chain. Most LNG volumes in the world are sold under long-term contracts A typical GSB will be a document of some length and complexity, but parts of this document may not be expressed in detail despite the inevitable length of negotiations. These provisions may deal with situations that are themselves uncertain or unexpected, or address issues that are sufficiently difficult or subordinate to the essence of the contract, for the parties to become comfortable keeping them in relatively insecure terms in the interest of concluding all other elements of the overall agreement. Obtaining a binding and binding agreement in accordance with English law depends on the conclusion of an agreement between the parties under specific and final conditions. The longer the rules, the more difficult it becomes to have the necessary foresight. Traditionally, liquefaction projects have been linked to the development of upstream gas resources – and gas was put on the market from an isolated site. However, in the United States, there is an active competitive gas market that LNG players can easily use to access the U.S. shale gas base and the accompanying pipeline network. U.S. LNG projects thus dissect access to liquefaction resources, allowing the use of different business models – capacity toll agreements. To the extent that the parties can anticipate and agree on certain changes in circumstances that could distort the expected balance of their agreement and its operation, it is not uncommon for international trade agreements to mitigate these effects by adding specific provisions.
In many cases, these provisions provide that, given the amended circumstances (taking into account the discipline of good faith undertakings and appropriate efforts), and in the absence of agreement, the parties agree to an arbitration decision to resolve their disputes. The next wave of LNG projects in the U.S. has tended to favour a spa structure, perhaps reflecting the fact that such construction is more attractive to customers and has an operational impact on project proponents. However, some existing projects with the LTS, in which these toll agreements are being put into service, remain in place. The usual types of LNG sales and sales contracts are: short-term sales contracts – bilateral contracts of one to five years, often with little flexibility in the conditions that typically involve LNG sales and sales contracts (PSPs) much longer than equivalent pipeline contracts. Given the very high sums of money and risks and the long duration of the agreement (usually 20-25 years), this is not surprising. This five-day course will give you a deeper understanding of the related business and contractual issues, as well as identifying and mitigating risks.