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W
ith the LNG industry remaining relatively stable despite the decline
in the price of oil, project sponsors and contractors are looking
to floating LNG (FLNG) and floating storage and regasification
units (FSRU) as a means to access stranded gas reserves andmonetise
offshore investments (with FLNG), and import LNG by means of a quicker
andmore cost-effective solution (using an FSRU). Much has been written
about sponsor/charterer considerations in FLNG projects. This article instead
considers key vessel owner risks in such projects, with particular emphasis on
the legal provisions in the contracts for FLNG/FSRU vessel construction and
charter, and subsequent operation andmaintenance.
Whilst there aremany variations on contracting forms for a floating project,
themost common form is an FLNG/FSRU vessel constructed by an owner and
chartered to the project operator or joint venture (JV) parties. This approach
forms the basis of the analysis set out in this article. The formof charter will
typically be a time charter party (TCP), under which the owner is responsible for
operation and the provision of services to facilitate production, processing,
storage and offloading of LNG (for FLNG) or the loading, regasification, storage
and offloading of gas (for FSRUs). The post-construction contractual
arrangements may be contained in a single agreement or in two separate
agreements: one agreement for charter of the vessel; the other for operation
andmaintenance services.
FLNG:
Jonathan Goldfarb, UK, and Patricia Tiller,
Dubai, Ince & Co.,
outline some of the key areas of
negotiation surrounding floating LNG contracts.
mitigating the risks
