LNG Commercial

Sale and purchase of LNG using existing facilities on contemporaneous commercial terms:

·        Drivers of commercial LNG:

ü Lower LNG costsreduce funding coverage and permit project commitment without full capacity sold

ü Competitive inland gas marketsreduce export project offtake risk if shipping and import capacity is available

ü Expanded LNG market scopeincreases “liquidity of exchange” for uncommitted production, shipping import capacity

·        Requires uncommitted capacity and commercial access “through the chain”:

ü For LNG supply

ü For LNG shipping

ü For LNG import/regas

ü For demand aggregation and inland access

·        “Optionality”is embedded in shipping, which becomes strategic

CCourse Topic

1.     Overview

a.     LNG Value Chain

b.     LNG Project Development

2.     Hydrocarbon Profile

a.     Reserve

b.     Production Forecast

3.     Cost of LNG

a.     Exploration Cost

b.     Exploitation Cost

c.      Administration Cost

d.     Cost of LNG Sales:

                                                             i.      LNG Debt Service Payment

                                                           ii.      Transportation Expenditures

                                                        iii.      LNG Plant Operating Expenditures

                                                         iv.      Sales Costs dan Liabilities Recovery

4.     LNG Pricing

a.     LNG Reference Market Price

b.     Price Indexation

c.      Oil Indexed Price Formula

d.     Spot & Short Term Market

e.      Netback Pricing

f.       Price Reopener

g.     Recent Pricing Issues

5.     LNG Contract

a.     Production Sharing Contract (PSC)

b.     Preliminary Agreements

c.      LNG Sale and Purchase Agreement

d.     Miscellaneous Agreements

6.     Financing  of  LNG Project

a.     Project Finance Structure

b.     The Financing Process

c.      Project Financing With Trustee Borrowing Model

7.     LNG Commercial Analysis

8.     LNG Risk Management

raread also: Loading Master for Oil, LNG, Gas and Petrochemical Terminals