BIMCO, GIIGNL reveal LNG voyage charter party

International shipping association, BIMCO together with the International Group of Liquefied Natural Gas Importers (GIIGNL) on Wednesday jointly issued “the first definitive” voyage charter party “LNGVOY” designed for the expanding LNG spot market.

The two organizations consulted with the industry while creating the LNG voyage charter party, the joint statement reveals.

The voyage charters addressed four main issues inherent in LNG shipping one of which is a boil-off cap whereby both owner and charterer agree on a negotiated maximum quantity of boil-off over the voyage. In case the cap is exceeded, a compensation structure, agreed during negotiations, is applied, subject to a few limited exceptions.

LNG Heel has also been addressed, and it was considered that legal title to the heel should remain with the owner throughout the charter and that there would be a balancing payment between the quantities remaining on board at the commencement and completion of the voyage, the statement reveals. Such an arrangement would help avoid potential issues with administration and bills of lading.

Additionally, the condition of the cargo tanks on arrival at the loading port is now covered in the LNGVOY.

The costs involved can be handled adequately under a voyage charter as opposed to a time charter trip covering the three potential conditions:

• cooled down ready to load;
• warm under natural gas vapours;
• warm and inerted.

Finally, the arrival at discharge port has been addressed, given the inherent nature of the cargo, scheduling of arrival times at discharge carries great importance and delays can be very costly.

BIMCO and GIIGNL added that as a result, voyages with a specific delivery window and risks of delay and ensuing boil-off have been allocated.

Chairman of the LNGVOY drafting group, Rodney Hyne-Jones, formerly of Exmar, said, “LNGVOY is equitable to both owners and charterers and provides a solid contractual platform for the transportation of LNG in an ever-growing spot market. It enables all parties to handle the costs involved in a more precise way.”

BIMCO chief officer legal and contractual affairs, Grant Hunter added that the new charter party provides owners and charterers with an alternative when deciding on the most appropriate terms for their LNG transportation needs.