The following Energy practice note Produced in partnership with Joanne Champkins and Nikki Chu of Stephenson Harwood LLP provides comprehensive and up to date legal information covering:
Practice Note: LNG—an introduction provides a general overview of the production and use of liquefied natural gas (LNG). This note concerns, specifically, the transport of LNG by sea.
The predominant purpose of liquefying natural gas is to transport it by sea, without a pipeline. In liquid form, LNG has around 1/600th of the volume it has as gas. The corresponding challenge, however, is that its boiling point is approximately -162°C. The low boiling point of LNG means that it is carried in specialised LNG carriers between terminals designed specifically for the handling of LNG.
Given that the production and use of LNG will almost certainly involve shipping, the contracts and legal issues involved in the transport of LNG by sea are central to the production and use of LNG.
The technical and commercial issues involved in the carriage of LNG by sea give rise to a number of particular legal issues that do not arise in the carriage of other cargoes. The purpose of this note is to consider what those issues are and how they may be addressed in different types of charter.
By way of brief outline, it is useful to consider four main types of charter used in the shipping industry:
a bareboat charter is essentially a lease, whereby the vessel owner (the ‘Owner’) provides their ship to the vessel charterer (the ‘Charterer’)
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