Gas & LNG Markets, Pricing and Contracts

Introduction

LNG trading, sink market mechanisms, the rise and fall of North America as a market for LNG, shale gas, nuclear incidents producing LNG shortfalls, and producing countries turning consumers all have left deep impacts on the LNG world and future contracts will bear their scars. The oil and gas industry is global in nature and it involves trading Pipeline Gas and LNG in Africa, Europe, the Middle East, Asia, and North America. These markets have grown rapidly as a result of demand and deregulation, bringing tremendous business opportunities for all the stakeholders including government entities, producers, sellers, transporters and buyers, etc. High contract value, complicated commercial terms, volatile prices, cultural differences, and many other unpredicted risks have made contract negotiating, dispute resolution, and risk management more and more challenging.

Effective training in these areas becomes an urgent need for relevant executives in both the public and private sectors. In response to such industry dynamics, this advanced training course will provide effective training in the critical considerations and conditions for successfully concluding Gas and LNG Sales Agreements. The training course will enable participants to gain an insight into the way in which Buyers and Sellers view and negotiate Gas and LNG Sales Agreements, and will give participants a detailed understanding of the terms that are important in these transactions.

This training course will highlight:

• Dynamic of downstream, midstream, and upstream activities
• Essentials of contract principles
• Gas Sales and LNG Contracts with reference to international model contracts
• Transportation Agreements with reference to international model contracts
• Gas sales and Purchase Agreements
• Contractual risk management issues, insurance, indemnities, liabilities, and force majeure
• Negotiation arts and strategies relevant to LNG contracts

Objectives

At the end of this training course all participants will be able:

• Understanding common contractual pitfalls in LNG contracts
• Negotiate profitably LNG contracts, with a clear understanding of insurance provisions, liability and indemnity clauses
• Enhance your ability to draft and negotiate LNG force majeure clauses
• Assess and manage risks as relevant to LNG contracts
• Grasp and apply dispute resolution methods to LNG contracts
• Mitigate Risks
• Addresses the key skills required to draft and negotiate modern Gas and LNG agreements and also learn how to establish a risk matrix and how to deal with risk in contracts.
• Gain Better Position
• Explains pricing mechanisms in various regional gas markets and their effect on Gas and LNG agreements to attain a better position in the contract.
• Avoid Disputes
• Show how the different agreements work with each other on a back to back basis and highlight the mechanisms of dispute resolution.

Training Methodology

This is an interactive course. There will be open question and answer sessions, regular group exercises and activities, videos, case studies, and presentations on best practices. Participants will have the opportunity to share with the facilitator and other participants on what works well and not so well for them, as well as work on issues from their own organizations. The online course is conducted online using MS-Teams/ClickMeeting.

Who Should Attend?

The audience for this training course will be:

• Senior and middle-level commercial managers
• Commercial lawyers
• Contracts Managers
• Compliance personnel
• Risk managers
• Energy purchasing managers
• Strategy managers
• Pipeline marketing managers
• Operations managers
• Project managers
• Senior government officials and regulators
• People who desire to get a quick yet deep and structured instruction in LNG matters
• People involved in handling LNG & Gas matters

Course Outline

DAY 1: Dynamic of Downstream, Midstream, Upstream & Contract Law  

• Introduction to LNG & Sales Contracts

• Training objectives

• key terms and definition

• The main international industry players

• Introduction to specific LNG and Sales agreements

• Legal System and Contract Law

  • Mandatory elements of a legally enforceable contract

  • Contract Law: Contract formation

  • Contract Law: Contract terms

  • Contract Law: Interpretation of contract terms

  • Contract Law: Remedies for breach of contract

• Assessing available remedies for breach of contract

  • Rescission

  • Compensatory damages

  • Consequential and incidental damages

  • Liquidated damages

  • Specific performance

  • Injunctive Relief

• Module 1—The Essence of the LNG and Gas Sales Contract

• Module 2: The Contractual Chain in Gas Development

• Module 3: Current Practice in Gas & LNG Sales Contracts

DAY 2:

• Module 4—Price Terms in Pipeline Gas Contracts

• Module 5—Price Terms in LNG Contracts

• Module 6—European Traded Gas Markets

• Module 7—Effect on Global Gas Prices of Deregulation in the European Gas Industry

• Module 8—The US Gas Market

• Module 9—Dispute Resolution

• Case Study

DAY 3:

• Module 10—Key Negotiation Skills

• Module 11—Economic Assessment of Gas Contracts

• Module 12—Risk Assessment of Gas Contracts—Identification & Handling of Risk

• Exercise

Day 4: Force Majeure Clauses 

• Understand the purpose and risks this clause is intended to mitigate

• Avoiding common Force Majeure pitfalls

• Protect yourself from abuse and misuse of this clause

• Mechanics of exercising Force Majeure rights

• Practical Exercise: Case studies

• Insurance Provisions

  • Overview of coverage types

  • Understanding typical insurance exclusions

  • Assessing the quality of your insurance carrier

  • Evaluating deductibles and coverage limits

  • Insurance subordination issues

  • Effective claims management

• Contract Management

• Operational issues

• Gas delivery procedures and coordination between suppliers, terminal operator, transporters, and users

• Types of dispute resolution vehicles

• Importance of the dispute resolution clause

 Day 5: Contract Claims & Dispute Resolutions

• Types and Assessment of Claims

• Tiered Dispute Resolution Mechanisms

• Formal Dispute Resolution

• Preventing costly litigation through effective use of ADR option

• Types of dispute resolution vehicles

• Assessing litigation vs. arbitration options

• Mediation considerations

• Considerations for selecting effective mediators and Arbitrators

• Selecting arbitration and mediation rules of procedure

• Drafting effective dispute resolution clause

• Practical Exercise: Mock arbitration exercise

• Contract Close-Out

• Contract Review, Evaluation, Lessons Learned

• Course Overview – Learning Outcomes