Session 6 Gas and LNG Sales Contract.pptx

this presentation talks in brief about Term agreement, Master Sales Agreement, Confirmation Notice, Depletion based vs Supply Based Contract from Sales and Buyer Perspective

1. Gas and LNG Sales Contract [For Non Engineer] Sampe L. Purba

2. Term Agreement Definition: Contract for sale and purchase of gas over specified period, usually for a fixed quantity of gas, with agreed-upon [already agreed] pricing and delivery schedules Duration  medium to long terms [months or years] Pricing  often predefined, fixed or as per formula Flexibility  not much, need formal amendment to the agreement Usage  suitable for stable, longer and on going supply Agu-24 Sampe Purba - Gas and LNG Sales Contract 2

3. Master Sales Agreement [MSA] Definition: A framework that sets the general terms and conditions for future sales and purchases of gas To set or govern the individual transaction that will be doing through Confirmation Notice [CN] Volume: does not commit to specific volumes, it will be governed in CN Pricing : Broadly defined, details in CN Flexibility: Highly Flexible, no need extensive renegotiations Usage: anticipating numerous transactions over time, no need extensive renegotiation Agu-24 Sampe Purba - Gas and LNG Sales Contract 3

4. Confirmation Notice [CN]  always be associated with MSA Purpose : CN or Transaction Confirmation, documenting specific individual transaction under umbrella of MSA Content: specify quantity, delivery dates, pricing and other transaction-specific terms Process: no need to negotiate the entire contract, as already being covered in MSA Agu-24 Sampe Purba - Gas and LNG Sales Contract 4

5. Depletion Based vs Supply Based Contract Agu-24 5 Sampe Purba - Gas and LNG Sales Contract Source and Quantity : Depletion-based contracts focus on supplying gas from a specific source until it's exhausted, while supply-based contracts focus on delivering a specific quantity of gas, potentially from multiple sources. Risk : In depletion-based contracts, the buyer assumes more risk related to supply exhaustion, while in supply-based contracts, the seller bears the risk of securing gas to fulfill the contract.

6. Depletion-based vs Supply Based Contract Discusssion As those model will link to Supply commitment, Risk allocation, flexibility, so it will be reflected in price and other relevant terms of the contracgt Buyers who require a guaranteed supply of gas over a defined long-term period will be in favor of supply based contract. Should parties could accept the flexibility of volume delivered as it comes from specified source of reservoir, as per production rate of the reservoir, it applies in depleted-based contract Agu-24 Sampe Purba - Gas and LNG Sales Contract 6

7. To what extent will be the flexibility or firmness of those things under depleted based or supply based contract  Discuss from seller and buyer perspective The remedy for the seller’s failure to deliver gas or LNG The gas or LNG price Facilities Force Majeure relief Agu-24 Sampe Purba - Gas and LNG Sales Contract 7

8. As a negotiation is an art, whether depletion based or supply based may come consider to the best interest of parties regarding: Contract quantities Source of Supply Price Economic termination Force majeure relief Agu-24 Sampe Purba - Gas and LNG Sales Contract 8

9. Various model contract in gas sales and transportation AIEN [AIPN] GSA – LNG – MSPA model Beach – UK transportation model BP MSPA for DES and FOB Base GIIGNL Master LNG Sales Agreement [Importer] NBP Trading Terms EFET [European Federation of Energy Trader] ShellLNGTime [for LNG tanker contract]. Agu-24 9 Sampe Purba - Gas and LNG Sales Contract

10. References Peter Roberts https://www.amazon.com/Gas-LNG-Sales-Transportation-Agreements/dp/041411129X The Law and Business of LNG, Paul Griffin, 2012 Energy Economics, Concepts, Issues, Markets and Governance, S.C Bhattaacharyya , 2011 Sampe Purba – www.slideshare.com Agu-24 10 Sampe Purba - Gas and LNG Sales Contract

11. Agu-24 11 Sampe Purba - Gas and LNG Sales Contract