CAN PRICES NEGOTIATED YEARS AGO IN LONG TERM LNG CONTRACTS SURVIVE IN TODAY'S VOLATILE GLOBAL MARKET? En: (LNG 16. Oran (Algeria), 21st April 2010)

The torrent of events engulfing and driving today's LNG markets are severely testing the business plans, agreements and expectations of the LNG business. Not only have we had to face a global recession but do so concurrently with unprecedented reductions in gas demand, volatile pricing and a surge in new gas supply. The situation defies the neat labels that fit past "buyers' markets" or "sellers' markets". And with unprecedented conditions come new questions and challenges for both LNG producers and buyers to manage.

Consider just one of those questions: one that has come more and more to fore. Just how robust are the pricing terms drawn up in agreements for a very different LNG world? Volumes which had been safely placed in traditional markets are now coming loose resulting in sudden changes in trade flows defying the expectations of only a few months ago let alone years ago. Even agreements with clear review clauses find themselves envisioning a world which events have passed by.

This paper will examine these challenges; consider just how different conditions are; and address whether a "return to normal" is a real possibility or whether different terms and practices will be required - not least in price and volume provisions. As the behaviours of producers, markets and buyers adapt to new conditions just how well will contracts reflect the increased volatility and (global) flexibility of the business, what kind of commercial teams are needed to deliver them and what defines the sufficiently skilled personnel and suitable processes and mandates to enable them to operate effectively?

<b>CONTENTS:</b>

<ul> <li> INTRODUCTION <li> LONG TERM CONTRACTS STILL DOMINATE <li> PRICING GAS IN LONG TERM LNG CONTRACTS <li> SHORT-TERM PRICING OF LNG <li> LONG TERM RELATIONSHIPS PARAMOUNT IN TRADITIONAL ASIAN MARKETS <li> CONTINENTAL EUROPE <li> FUNDAMENTAL CHANGE IN THE US MARKET <li> NEW LNG COMING TO EUROPE <li> IMPACT ON ASIAN MARKETS <li> MANAGING CONTRACTS IN THIS UNCERTAINTY <li> CONCLUSION </ul>