Lng Tolling Agreement

Toll systems are complex and critical elements of the structure of the LNG project. The mechanism for allocating LNG to project participants and monetizing their gas rights is incorporated into the toll and cancellation agreement. Continuity of toll agreements between different toll partners using joint or common facilities is an essential element in structuring the toll portion of an LNG project. The structuring phase is essential and decisions taken at an early stage will guide the negotiations and advance the approach to documentation. When implementing the third-party LNG toll structure, the project management company (i) provides natural gas suppliers with a fee for a liquefaction treatment service; (ii) is not related or belongs to paying customers; (iii) may assume a negotiated and capped amount of liability, appropriate to a reasonable business risk; (iv) requires the guarantee of paying customers to protect their interests in investments and satisfy lenders, v) do not own natural gas, LNG or by-products, or vi) ownership of natural gas, LNG or by-products and (vi) do not take risks. Given the proximity of the grid with probably abundant gas for most U.S. projects, deding and availability of gas reserves is generally not an aspect. This paper highlights the main considerations in negotiating a toll system for third parties, which reflects the agreements we see in many U.S. projects. Port Arthur received its Final Environmental Impact Statement (EFSI) from the Federal Energy Regulatory Commission (FERC) in January and is expected to receive its final FERC contract later this year, its non-free-trade (non-FTA) agreement from the Ministry of Energy (DOE). The lifting, measurement and allocation conditions are generally incorporated into the toll agreement; However, these conditions can also be included in a stand-alone agreement signed by all paying customers, which facilitates the flow of information, among other things, for the development of the supply plan for supply of gas, the annual LNG lifting program, the allocation of LNG and by-products, the standards and inspections of ships and the determination of liability. It is essential that the provisions relating to repeal and planning conditions (including port use agreements or terms of use), measurement methodology and the allocation of LNG and other by-products to all toll customers be consistent in a project.

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