Decarbonisation imperils long-term LNG contracts
Failing to incorporate greater flexibility into LNG purchase agreements could spell trouble as nations get tough on carbon emissions
LNG producers are failing to include sufficient protections against unforeseen events in their contracts with buyers—an oversight that could lead to expensive litigation should deals turn sour, a top industry lawyer told the 2020 Gastech Virtual Summit last week. The annual contract volume of 20-year LNG sales-and-purchase agreements (SPAs) has slumped over the past decade, from a peak of around 25mn t to about 12mnt last year and less than 2mn t so far in 2020. But they remain an industry staple despite doubts over LNG’s long-term profitability. “Shorter duration contracts are still very long term... [there are] requirements for flexibility at all levels and pretty much in all ways,” says P
Also in this section
21 February 2025
While large-scale planned LNG schemes in sub-Saharan Africa have faced fresh problems, FLNG projects are stepping into that space
20 February 2025
Greater social mobility means increased global demand for refined fuels and petrochemical products, with Asia leading the way in the expansion of refining capacity
19 February 2025
The EU would do well to ease its gas storage requirements to avoid heavy purchase costs this summer, with the targets having created market distortion while giving sellers a significant advantage over buyers
18 February 2025
Deliveries to China decline by around 1m b/d from move to curb crude exports to Shandong port, putting Iran under further economic pressure
