RasGas will continue to utilise flexibility in its portfolio to capture both short- and long-term contracts to further expand and serve its customers as well as the liquefied natural gas (LNG) markets, said a senior company official.
This approach is key to meeting short- and long-term markets 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.
This is RasGas’ 10th consecutive participation in the industry event for which it was a platinum sponsor. In his opening keynote address titled, ‘Perspective of a Major Supplier: Characteristics of New Long-Term LNG Contracts’, al-Kuwari outlined 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.
He said 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. At RasGas, our goal is to maintain a balanced partnership with our customers based on equitable terms, which are agreed at the time of initial negotiations; to make the relationship work,” al-Kuwari added.
The annual CWC World LNG Summit brought together more than 500 industry professionals from all over the world.
