RasGas relies on flexibility in new LNG contract trends

RasGas said it will continue to utilise flexibility in its portfolio to capture both short- and long-term contracts to further expand and serve its customers and the liquefied natural gas markets.

This approach is key to meet short- and long-term market and customers’ increased demand and the new trends for flexibility, and most importantly, reliability, said RasGas Chief Marketing and Shipping Officer, Khalid Sultan R. Al Kuwari, at the CWC World LNG Summit, Paris.

Kuwari delivered an opening keynote address titled, ‘Perspective of A Major Supplier: Characteristics of new long-term LNG contracts’, outlining the interplay of price indexation, contract term and flexibility; and how these factors are influencing commercial terms for new long term LNG sales and purchase contracts.

In his speech, he said that the definition of the market for ‘long term’ may change as market expectations continue to evolve. The trend towards short-term and shorter long-term contracts may continue if new supplies are developed in a timely fashion to meet overall global demand. If projects are not developed on time, then longer term commitments and contracts will return to lead the market.

 “LNG contract flexibility may encompass many different contract provisions including among others, annual quantity tolerances, diversions, seasonality of supply and alternative destinations. However, such flexibility comes at a price; flexibility offers value and that value must be priced into the contract in ways that make commercial sense for both sellers and buyers.” added Al Kuwari.

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Image: RasGas