Sales Contract Flexibility in the LNG Trade
Article from: OGEL 1 (2006), in Liquefied Natural Gas (LNG)
Abstract
Flexibility in LNG contract terms cannot alter the dominant economic and political factors which affect expansion of the LNG trade, but it can provide some stimulus for growth by fostering confidence that long-term energy commitments can adapt to inevitably changing circumstances. LNG price escalation formulas attempt to integrate short-term oil factors with long-term LNG sales. This flexibility, however, is missing for the reciprocal of LNG price, namely, LNG quantity. Several recent developments suggest new perspectives for preparing take-or-pay clauses. ...