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Contract Risk Management Master Class Presented by Steven R. Miles Jason K. Bennett
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Bahamas: Ocean Cay Project Puerto Rico: Ecoelectrica Project Trinidad & Tobago: Atlantic LNG Project
Japan Osaka Gas Western Buyers India: Dahej LNG Terminal Kochi LNG Terminal Dahbol Project Pipavav Project
Equatorial Guinea: Brazil: Pecem LNG Terminal EG LNG Project Rio de Janeiro LNG Terminal United States Gulf Coast: Golden Pass LNG Terminal Pelican Project Cameron LNG Project Compass Port LNG Project Beacon Port Project
Pearl Crossing Project Vista del Sol LNG Terminal Freeport LNG Project Main Pass Energy Hub Port Arthur LNG
High demand for LNG, including growing import demand in traditional Asian markets, the U.S., Latin America, China, India, and elsewhere It is a Seller's market, at least through 2012 but LNG supplies have much greater destination flexibility than in the past
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The LNG project value chain is a series of separate but interdependent activities, each of which is critical to an LNG project and each of which relies on the same project revenue stream. Each activity has its own commercial agreements and arrangements connecting the participants.
CWC World LNG Summit (December 2007) Page 8
TUA/TSA Transportation Agreement Gas Storage Agreement Shipper Cooperation Agreement Scheduling Agreement
Financing Agreements
CWC World LNG Summit (December 2007) Page 9
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The Confirmation Memorandum incorporates by reference the General Terms and Conditions
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Each executed Confirmation Memorandum constitutes a separate agreement between Buyer and Seller
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Financing: Unlike an SPA, an MSA is usually not used to finance a large LNG project Gas Supply and Gas Offtake: For an MSA, long-term supply of gas and viability of downstream markets are not issues
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Buyer's performance obligations: Specifies the consequences for failure to take LNG
Take-or-pay with make-up Take-or-pay with mitigation sale credit Liquidated damages
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IPE
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Conclusion
MSAs serve a different purpose than long-term SPAs and impose different obligations on the parties MSAs facilitate short-term and spot purchase and sales of LNG cargoes that are increasingly important to LNG liquefaction and regasification projects MSA are an important part of the evolving LNG market, including the development of a spot market for LNG
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Thank You
Steven R. Miles Baker Botts L.L.P. 1299 Pennsylvania Ave., NW Suite 1300 Washington, D.C. 20004 Tel: +1.202.639.7951 Fax: +1.202.585.1090 Email: steven.miles@bakerbotts.com Jason Bennett Baker Botts L.L.P. 2001 Ross Avenue Dallas, TX 75201-2980 Tel: +1.214.953.6425 Fax: +1.212.661.4425 Email: jason.bennett@bakerbotts.com
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