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Practice Areas

• OUR SERVICES
• ENERGY
• SHIPPING
• DISPUTE RESOLUTION

• OIL & GAS EXPLORATION & PRODUCTION
• OFFSHORE CONSTRUCTION
• LNG TRADING & TRANSPORTATION
• POWER GENERATION & DISTRIBUTION

Energy: LNG Trading & Transportation

We advise on a range of contracts for the sale and transportation of crude oil, products and gas, although our principal expertise is in relation to liquefied natural gas (LNG), the fastest growing primary energy source in the world and the "clean fuel" of the future. Our expertise in this area encompasses LNG trading, infrastructure issues relating to the liquefaction and regasification, as well as the ocean transportation of LNG.

LNG Trading

We are fully familiar with the contract terms for the sale and purchase of LNG, whether on an FOB or ex ship basis and with the legal issues arising in relation to the creation of a long term SPA or short term spot contract.

In any short term trade the most critical issue is to align the shipping contract with the sale and purchase agreement so that the terms on which key issues such as the calculation of freight, laytime and demurrage, and destination flexibility are dealt with are "back to back". We help clients with contract terms for the sale and purchase of LNG and are fully familiar with the legal issues arising in relation to the creation of a long term SPA or short term spot contract. We also have the practical experience to advise not only on the terms of the shipping contracts but also the sale and purchase arrangements to ensure this alignment.

LNG Liquefaction and Regasification

When natural gas is cooled to the point that it condenses to a liquid, which occurs at a temperature of approximately -161°C at atmospheric pressure, it reduces to 1/600th of its gaseous volume. It is as such economically viable to transport in liquid form but this requires export (liquefaction) and import (regasification) terminals, which form key part of the international LNG supply chain, accounting for approximately 45% of the typical cost of an export LNG project.

Construction of these terminals - unlike the construction of LNG ships, where cost overruns have been relatively limited - has historically been prone to significant cost and time overruns. Our LNG team's construction expertise, in particular in resolving construction related disputes, makes us ideally placed to advise in these areas.

The environmental, safety and regulatory constraints in particular on the construction of import terminals has led to a dramatic increase in the range of offshore solutions available both for liquefaction and regasification. Our team's expertise in the construction of fixed and floating units to produce and store hydrocarbons coupled with our experience in the construction of onshore terminals makes us ideally placed to advise in relation to projects of this type.

LNG Transportation

Advances in liquefaction technology and intensive competition among Far Eastern shipbuilders have led to dramatic falls in the cost of transporting LNG, making it a genuine competitor to other forms of fossil fuel. We specialise in particular in transactions relating to the long term employment of LNG carriers to meet the transportation demands of gas companies.

The LNG market is evolving rapidly, with the emergence of new markets in Europe, the US, and the Asia-Pacific basin fuelling world-wide demand for LNG carriers. Our LNG team, whether acting for a shipowner or an energy company on an LNG project, can advise on the preparation and negotiation of a wide range of contracts, relating to the acquisition of LNG shipping capacity.

From the energy company's perspective, the acquisition of shipping capacity involves key strategic decisions including whether vessels are to be acquired through ownership or long term charter, international tender or private negotiations and whether these issues are to be approached on a project by project basis.

The long term LNG time charter remains the principal transportation contract in use in the industry. Where the vessel will be dedicated to a particular project, we fully understand the issues involved in aligning the long term charter with the SPA and other key elements of the overall project, including shareholders' agreements where the vessel is to be owned and operated as part of a joint venture. We regularly advise some of the industry's largest players on the structure of their international tenders, the detailed preparation of the ITT, the relationship between the various shipping contracts and the project structure, the shareholders' and ship management agreements and the security that will be required to secure competitive tenders from shipowners.

Although the long term charter remains the bedrock agreement of the industry, the development of a spot market and genuine trading opportunities in LNG has also lead to the development of increasingly flexible shipping arrangements, including cargo swaps, short term time and voyage charters, pooling agreements, and contracts of affreightment. In any short term trade the most critical issue is to align the shipping contract with the sale and purchase agreement so that the terms on which key issues such as the calculation of freight, laytime and demurrage, and destination flexibility are dealt with are "back to back". Our LNG team has equally extensive experience in advising on these issues.

LNG Shipbuilding

The long term charterer of LNG newbuilding tonnage will also often be involved in the placing or the negotiation of the shipbuilding contract, negotiating with the relevant shipyard such issues as ship size, cargo capacity, propulsion and containment systems and price, before "passing" these terms to the pre-qualified owner to complete the contract. With our extensive shipbuilding experience we are ideally placed to advise on these terms.

We have negotiated and advised shipowners and charterers on LNG newbuilding contracts placed with most of the major shipyards in Korea and Japan. In this context, our dispute resolution team has been involved in advising on various issues arising in relation to gas containment system failures on LNG carriers, an issue that has been generating considerable industry concern.

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