Types of LNG sale and purchase agreements Liquefied natural gas (LNG) is commonly traded as a portfolio commodity, in which a participant may break up several long-term sales agreements into short-term transactions to optimise transport costs and balance supply obligations with market conditions. The LNG industry also maintains its own spot-trading market, in which cargoes are bought and sold through competitive tenders and brokered trades. Alternatively, swap arrangements (under which two buyers or two sellers agree to swap cargoes) is another trading model becoming more common in the LNG industry. The common types of LNG sale and purchase agreements are: • short-term sales agreements—one to five-year bilateral agreements, often with little flexibility of terms • master agreements—a popular arrangement under which seller and buyer sign an agreement that sets out the general terms under which they will buy and sell LNG, without committing the parties to an obligation to actually buy or sell specific quantities. When the parties wish to transact, they will complete a supplementary ‘confirmation notice’, deemed to include the general terms of the master