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
2 June 2025
More than anything else, weak Chinese gas demand is providing relief to EU consumers, but it is uncertain how long this relief will last
30 May 2025
Energy majors argue transition debate has started to factor in the complexities of demand shifts and the wider role for gas
29 May 2025
Sovereignty is the watchword for the new government, but there are still upstream opportunities for those willing to work closely with the state
29 May 2025
A cautious approach to coal-to-gas switching offers lessons to others who are looking to balance cost with cleaner energy
