Gas Processing & LNG is Produced by Gulf Publishing Holdings LLC



BP publishes LNG contract templates to push industry standardization

Global oil and gas major BP has published its master sales and purchase contract templates for its liquefied natural gas (LNG) trading business and says it is the first of its peers to do so.

BP, which has a global LNG portfolio made up of volumes it has produced or bought, said on its website it expects that publishing its LNG master sales and purchase agreement (MSPA) templates will “contribute to the broader discussion around standardization and liquidity for LNG transactions.”

The LNG industry has been pushing to streamline and standardize the contracts that govern its market to cut down on red tape and lengthy negotiations to speed up the commodity’s transition to an oil-like trading model.

A BP spokeswoman did not reply to a Reuters query on the matter, but the company said in a press release earlier this year that it wants to promote efficiency in the rapidly growing LNG industry by disclosing its standard LNG trading terms.

BP already has a standardized template - known as its general terms and conditions (GT&Cs) - for the sale and purchase of crude oil and refined oil products that is widely used by other companies as well.

An MSPA is a complex framework agreement between two counterparties spelling out the general terms for their LNG deals. Unlike in oil markets, where standardized GT&Cs like BP’s provide a framework for traders to refer to, in LNG markets, companies typically draft separate contracts for every deal.

Companies have to draft several MSPAs before conducting an actual trade, spending time, money and resources in a process that can range from minutes to weeks or longer.

In 2017, international commodity trader Trafigura also released an MSPA to encourage standardization of contracts in the LNG industry.

With LNG spot volumes expected to grow as new liquefaction projects come online, standardized contracts could lower entry barriers and attract more companies to the market, according to industry participants.

Since the third quarter of last year, bids, offers and trades reported to pricing agency S&P Global Platts as part of its pricing process have become “significantly more homogenous with regards to the terms used,” said Ciaran Roe, global director of the company’s LNG division.

These terms include nomination deadlines for the delivery port, the loading port and the LNG carrier for use in a trade, Roe said.

Platts assesses the widely adopted Japan-Korea-Marker (JKM) in the Asian spot market.

Reporting by Jessica Jaganathan; Editing by Tom Hogue


Copyright © 2019. All market data is provided by Barchart Solutions. Futures: at least a 10 minute delay. Information is provided 'as is' and solely for informational purposes, not for trading purposes or advice. To see all exchange delays and terms of use, please see disclaimer.

                                  CMEGroup                                     Icelogo

FEATURED COLUMNS

Editorial Comment
-Adrienne Blume
The continued expansion of natural gas trade is led primarily by growth in the LNG sector, which has tripled over the past 3 yr.
Industry Focus: The future of gas-to-power projects in Africa
-Shem Oirere
Natural gas is expected to play a central role in supporting Africa’s drive to achieve electricity connection for nearly 600 MM people without access to the grid, to reduce widespread reliance on coal for power generation, and to fast-track the continent’s slowed industrial expansion.
Regional Focus: Gazprom faces challenges for combined LNG/processing plant in Baltics
-Eugene Gerden
Russia’s largest natural gas producer, Gazprom, aims to build a giant project on the Russian Baltic seaport of Ust-Luga. The plans include the construction of a combined LNG and gas processing plant.


Environmental Considerations for Gas Pipeline Construction in Sensitive Areas

Register Now

Ambioconsult, a subsidiary of Vepica, developed an environmental and social impact assessment for a subsea/land gas pipeline in Venezuela. This webcast will provide details on how the project lessened environmental impact and complied with regulations and stringent conditions, such as the presence of national parks and endangered species. The presenters will provide the steps they used to achieve social and environmental sustainability in a capital-intensive natural gas pipeline project.

September 11, 2019 10:00 AM CDT

Register Now

 

Please read our Term and Conditions, Cookies Policy, and Privacy Policy before using the site. All material subject to strictly enforced copyright laws.
© 2019 Gulf Publishing Holdings LLC.