Abstract
The LNG business in the Pacific Region is unique because there is no other source of energy in which seller and buyer sign contracts for 20-year periods.
This long-term relationship is based on mutual buyer/seller cooperation, and mutual buyer/seller recognition of the financial and commercial challenges faced by all links in the LNG Supply Chain. However, there are now concerns that those involved in the LNG business were ignoring the fundamentals of the trade. The buyer expected the seller to absorb higher transportation costs, easing take or pay terms, more flexibility, evergreen options on uncommitted capacity, etc. On the other side, sellers expected larger baseload quantities, equitable sharing of LNG chain risks with consumers, etc. Both parties seemed to lose sight of the fundamentals of the LNG business. Both Buyer and Seller should preserve their best traditions and stubbornly hold on to the old fundamentals of the LNG business. If not, future trade will not come to reality.
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