Specifically catering to LNG carriers, charterers and traders, this seminar scrutinises the commercial & legal aspects of LNG shipping; and sheds light on how LNG charter parties should be used in practice. Aimed at enabling attendees to excel in negotiation of chartering contracts and in ensuring performance obligations, the programme zooms in on major pitfalls to consider – including technical aspects pertaining to LNG cargo, vessels operations and cargo transfer; as well as trading issues that have important implications on clauses & provisions.
You will gain from practical lessons and exercises across a range of matters, including LNG time / trip chartering, boil-off and bill of lading, ship-to-ship transfer provisions, cargo quantity vs quality issues, newbuilding chartering vs existing ship charters, the key differences against oil tanker chartering and delivery obligation reviews.
Key Learning Outcomes
- Overview of LNG chartering market and important differences with oil chartering
- Long term project charters vs short term spot charters
- LNG delivery obligations
- In-depth analyses of LNG charter clauses (commercial, operational, legal clauses)
- LNG boil-off specifications on bills of lading and charterparties
- Taking and negotiation a position for charterer and for owner
- Review key provisions on LNG loading & discharge performance, STS transfers, demurrage
- Warranties and review clauses and rights to liquidated damages
- Examine specification of LNG cargo and quality/ quantity issues
- Common problems in LNG trading, MSPAs and practical mitigation strategies
- Liability regimes in LNG shipping and trading
- Changing of load/discharge port and force majeure
Who Should attend
This course is developed specifically for executives in functions across chartering desks, operations, contract, lawyers, fleet management
- LNG charterers & traders
- LNG Tanker owners and operators
- FSRU & FPSO operators
- Oil & gas majors, NOCs and independents
- Shipyards with their own fleet available to charter
- P&I Clubs
- Legal Services
- Banking and Finance
Marcus has one of the broadest practices of all partners within ReedSmith’s Transportation Industry Group. He is an experienced litigator, capable of handling from oil & gas to dry-shipping, offshore and
Admiralty matters and also has extensive experience in non-contentious matters. He is recognised as a leading lawyer in LNG shipping practice and has been engaged as the legal advisor to SIGTTO for many years.
Marcus advises shipowners, charterers, trading houses, bunker suppliers, shipbuilders, banks, P&I Clubs on numerous aspects ranging from contract (chartering, building, supply and sale & purchase) drafting to handling associated disputes valued at multimillion dollars. His most recent experiences include:
- Advising owners of a large LNG fleet in relation to alleged exposure to the costs of compliance with IMO 2020 under long-term charterparties.
- Advising owners, charterers and traders in relation to boil-off and cargo capacity issues under LNG time charters and MSPA.
- Drafting and advising in respect of Master Services
- Agreement in respect of 27 LNG Carriers built by QGTC and chartered to RasGas and Qatargas
- Drafting and negotiation of contracts relating to the establishment of an off-shore LNG terminal, including the TUA, O&M and support vessel’s service and long-term charter contracts
- Drafting a bespoke long-term time charter for a new-build LNG bunker tanker.
- Drafting bespoke standard form LNG Master Sale and Purchase Agreements (MSPA) for trading house / banks and numerous reviews of MSPA and SPA.
- Drafting management agreements for the operation and maintenance of LNG carriers, including a fleet-wide master service agreement
Marcus also possess in-depth expertise in dry & oil trades, having covered various works for owners, terminal operators, charterers in multinational, multi-jurisdictional matters such as cargo damage claims, receiving terminal damage, collision claims, unsafe port, non-performance claims, STS incidents, cargo liquefaction claims, and many more
Live Online Learning
Stay Home. Skill Up!
The current Covid-19 pandemic has put strains on various areas of business, especially when it comes to deriving commercial value from new initiatives. During this phase of self-isolation and working from home, we can help you meet your professional development needs and you can still take your professional development plans to the next level.
To support your learning goals we have converted our face-to-face trainings to LIVE Online Sessions. This way you can continue to attend live and interactive training sessions within the virtual classroom space where you can see and speak, with your Subject Matter Expert and other participants.
Benefits of Live Online Learning
Aimed at offering you immediate, high-quality practical information whilst minimising time and expenditure associated with travelling, our digital training platform enables you to interact in real time with course directors and remotely network with your fellow participants.
- Classroom Experience: Progress with fellow participants as you would in an on-site class
- Guaranteed cost-effectiveness: Travel budget saving, plus 20% price advantage for online participation
- Controlled environment with speakers managing the Q&A and discussions and tools for enhanced interactions
- Module-based approach to effectively manage your time and revisions
- Earn your Digital Certification and broadcast your achievements to your peers
- Onboarding: Available for all attendees
- Proven and secure training platform
Upon completion of this training course, participants will earn a digital badge.
Attend and participate in the 2 full days of training course duration, led by the designated training expert
LNG SHIPPING & CHARTERING
WHY IS CHARTERING AN LNG CARRIER DIFFERENT TO CHARTERING AN OIL TANKER?
- Introduction to carriage of LNG, boil-off and heel
- The principal differences between a short-term charter for an oil tanker vs an LNG carrier
- The absence of voyage chartering in the LNG market
WHAT DIFFERENCE DOES THE TYPE OF ENGINES MAKE (STEAMSHIPS, DFDE/TFDE, DIESEL, MEGI AND XDF)?
- Comparative consumptions
- Type and mix of fuels that can be consumed
- Impact of IMO 2020 / scrubbers
- Use of boil-off, natural and forced
- Managing excess boil-off: steam-dumping, flaring in gas combustion unit (GCU) and venting
- What is pilot fuel?
WHAT DIFFERENCE DOES THE TYPE OF CONTAINMENT SYSTEM MAKE TO HOW YOU CAN USE THE SHIP?
- Costs wise:
- Boil-off rates
- GRT and its effect on port and canal dues
- Speed and performance
- Cool down period
- How do filling limits vary and why?
- Which systems have sloshing limits, what are they and how do they effect flexibility?
- How is the capacity of the LNG carrier warranted and where do we get caught out?
- Condition on delivery and redelivery:
- Gas free, vapours or heel
- Warm or cooled down
A DETAILED LOOK AT BOIL-OFF IN TIME CHARTERS
- Why and how to warrant the boil-off characteristics of an LNG carrier:
- The criteria and limits of the cargo containment system designer’s and builder’s warranties vs the charterparty warranties
- Should there be laden or laden and ballast warranties, and who benefits from either?
- Reliquefaction plant, how to warrant the performance
- Why speed and performance provisions are different to oil tankers
- The standard approach to calculating fuel consumption (with regards boil-off)
- Why it is not suitable for chartering modern LNG carriers
- What alternatives can or are adopted
- The period(s) during which boil-off is warranted
BILLS OF LADING:
- Why are these still rare in the LNG trade and why we should not follow tradition
- What should a bill of lading for LNG include:
- How do we deal with the inevitable shortage (due to boil-off) on delivery?
- Argentine and Indian customs issues and switch bills of lading
THE SPECIFICATION OF LNG CARGO AND QUALITY/ QUANTITY ISSUES
- Typical specifications by region
- Contamination risk
- The use of strainers and the Hilli and LNG Gemini
- Quality issues
- How does a cargo loaded compliant become too lean or too rich on discharge?
- Wobbe index and correction
- City gas
- Methane Number
- Quantity issues
- Boil-off on passage
- Retention of Heel
HOW DO WE MANAGE THE CARGO ON PASSAGE?
- Conditioning of cargo
- Segregation or consolidation of heel
- Roll-over of cargo
HOW DO WE MANAGE THE TRANSFER OF AN LNG CARGO?
- Loading and discharge performance warranties and their criteria:
- Cool-down and ramp down
- Liquid arms
- Vapour return arm, managing displacement has and heat in-leak
- Back pressure
- Retention of Heel provisions
- Typical provisions
- Early departure from discharge port
- Early termination
- Ship to ship transfer provisions
- Historic reasons for limited rights
- Typical provisions
HOW DO WE MEASURE CARGO?
- The relationship between calorific value (for trading) and volumetric measurement of cargo
- Typical components and variations in their proportions during carriage
- Cargo measurement devices
- The importance of the Custody Transfer Management System (CTMS)
WHAT IS A FUEL OIL EQUIVALENT FACTOR AND WHAT DO WE NEED TO BE WARY OF:
- Appropriateness of fixed ratios for a single fuel oil or multiple fuel oils
- Assessing by comparison to methane or the cargo carried, and which is more appropriate
- Making comparison between Lower Heating Values and Higher Heating Values
- Recognition of nitrogen content (or not)
WHAT ARE INTERNATIONAL STANDARDS AND WHY ARE THEY IMPORTANT?
- The role of SIGTTO and the ambit of its reach
CHARTERING A NEW BUILDING, WHAT MIGHT BE DIFFERENT TO DOING SO FOR AN OIL TANKER?
- Warranties and review clauses and rights to liquidated damages
- Sea margins
- Why gas only and fuel only warranties do not necessarily equate when applying FOE
WHAT WE MEAN BY ‘LONG-TERM’ IN THE LNG BUSINESS AND WHAT DIFFERENCE IT MAKES TO CHARTERPARTY TERMS
- Step-in rights and supplemental construction agreement with shipbuilder
- Rights to modify at any time
- Variable OPEX element to hire rate:
- Index linked
- Hardship review
- Costs passed through
- Additional Costs element to hire rate
- Rights to convert to bareboat or purchase
- Enhanced termination rights
WHAT STANDARD FORMS HAVE BEEN PROPOSED FOR VOYAGE CHARTERING LNG CARRIERS?
- GIIGNL’ form
- BIMCO’s form
- How each attempts to deal with the issue of boil-off between gaugings
- Alternative means of addressing boil-off in voyage chartering
- Vetting approval
- Compatibility – list of terminals, modifications
WARRANTIES FOR LNG CARRIERS
- Form B (instead of Q88) and how it interacts with the time charter terms
HOW LIABILITY REGIMES DIFFER BETWEEN LNG AND OIL TRADES
- Conditions of Use
- The variety of liability regimes
- The International Group of P&I Clubs and the
- Pooling Limits
- The premium for market cover
- HNS Convention rather than CLC Convention, and limits of applicability
LNG TRADING SESSION LNG MSPAS
- A ‘typical’ LNG MSPA structure
- How are trades agreed and papered in practice?
- Common problems negotiating LNG MSPAs, and practical ‘workarounds’
- In a ‘typical’ LNG MSPA, when must the LNG ship arrive, when must loading / unloading be completed, and what are the typical consequences for a delivery failure?
- What are the subtle differences to look out for when reviewing delivery obligations
- How long (if at all) do the parties have to try and reschedule?
- Are damages calculated on quantity not taken/ delivered or full cargo lot? Are ‘indirect’ damages included in the calculation?
- In a failure to take, who takes the credit risk on seller’s sub-buyer?
- Why is there a difference between the point at which failure to take/ failure to deliver liability kicks in, and the time at which demurrage starts to accrue?
- In a ‘typical’ LNG MSPA, what are the consequences if an ‘off-spec’ issue is identified?
- What are the subtle differences to look out for when reviewing delivery obligations (e.g. are damages calculated on the off-spec quantity or full cargo lot?
- Are ‘indirect’ damages included in the calculation?
- Is there a different regime for treatable and untreatable quantities?
- Does the MSPA allow cargo operations to be suspended if an issue is discovered before loading / unloading has been completed?
- Can the Buyer make a ‘double-recovery’ under the off-spec and failure to deliver regimes?
- What does an obligation to use ‘reasonable endeavours’ to accept LNG mean in reality
- Can you reject off-spec LNG if you are liable to pay your sub-buyer materially more than you can recover from your supplier)?
- Are costs estimates helpful or not?
- Passing title in international waters; why are these provisions so common?
- What are the key components of international title transfer?
- Common issues in title transfer clauses
- Lack of clarity about where title passes
- How much LNG is being transferred
- When should title pass back to the seller
- Treatment of natural gas vapour
- Part cargo lots
- Right to use LNG as fuel
- The case for and against fixing the Loading Port/Unloading Port in the Confirmation
- What is (or what should) be included in the Seller’s
- Facilities and the Buyer’s Facilities (and what does this mean for FM)?
- Who are you responsible for and, therefore, what is in your control?
- Different approaches to FM termination (who, what, when?)
DEMURRAGE AND BOIL-OFF
- What are the usual exceptions to laytime and demurrage?
- Liability for demurrage on other ships at the loading / unloading port;
- Is this needed and what to look out for
- Boil-off compensation
- The difference between deemed boil_off and actual boil-off
US EXPORT CONTROLS
- Why do LNG MSPAs sometimes include special provisions for US origin LNG
- Things to think about for Buyer and Seller
MEASUREMENT AND TESTING
- Which rules are being applied?
- How boil-off and displacement gas are addressed in MSPAs
- Avoiding commitments which cannot be complied with; some common issues to consider
- Expert determination
- Pros and cons
- Rights of appeal
- Practical considerations
On-site & in-house training
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