October 2006

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HPIn LNG: Changing role of long-term LNG contracts

The traditional liquefied natural gas (LNG) supply chain applies a carefully structured and contractually defined system to share risk among all participants. Central to this structure is the long-ter..

Mokhatab, S., Consultant

The traditional liquefied natural gas (LNG) supply chain applies a carefully structured and contractually defined system to share risk among all participants. Central to this structure is the long-term contract between buyer and seller for LNG – known as the sale and purchase agreement (SPA). Contracts are usually 20 years, although longer and shorter contracts are common. The point of delivery might be either FOB (point of loading onboard ship) or ex-ship (point of unloading), depending on which party assumed the tanker transportation responsibility and cost. Risk terms. Risk sharing of contracts is embodied by the phrase "the buyer takes the volume risk and the seller takes the pric

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