Liquefied natural gas (LNG) can be defined as meaning any combustible hydrocarbon or mixture of hydrocarbons consisting primarily of methane and including other combustible and non-combustible gases in a gaseous state which are in a liquid state at or near atmospheric pressure at sea level. LNG is a form of processed natural gas; through the process of liquefaction it is transformed into a liquid which enables it to be transported to its destination where the liquid is regasified for sale.

Natural gas is a valuable commodity that has a wide variety of uses, including power generation, heating and cooking. When cooled to roughly -162°C, the gas liquefies and reduces in volume by a factor of 600, thereby enabling the liquefied natural gas (LNG) to be more easily transported, for example by sea on ships. This is especially important when geopolitical factors, such as war or other instability, affect the viability of land-based pipelines. The physical properties of LNG mean that issues arise from its carriage which are not encountered in the case of other commodities transported by sea. This Practice Note provides an introduction to these various issues and the types of disputes that arise as a result. For more general information on: • LNG, see Practice Note: LNG—an introduction • carriage of LNG cargoes, see Practice Note: Carriage of LNG cargoes—an introduction • LNG project structures, see Practice Notes: LNG—Structuring LNG projects • common forms and key legal issues in LNG sale and purchase agreements, see Practice Notes: LNG sale and

Introduction 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

There are a number of industry LNG Sale and Purchase Agreements (LNG SPA) Master Agreements, offering slightly different risk matrices for buyers and sellers. This Practice Note contains quick links to common model form LNG

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

While an LNG project must consider, in varying degrees, all aspects of the LNG value chain, this Practice Note focuses on the components that differ from other hydrocarbon projects, namely liquefaction, LNG transportation and LNG regasification. The issues and contracts involved in the upstream and downstream components of an LNG project are comparable to those involved in a crude oil project. For more information on LNG generally, see Practice Note: LNG—an introduction. For further practical guidance on the financing of energy, power and resources projects across a number of sectors, including those discussed in this Practice Note, see also textbook: Energy and Resources Financing: A Practical Handbook. Key issues in LNG projects Integrated or non-integrated structures Broadly speaking, an LNG project will either be structured as an ‘integrated’ or a ‘non-integrated’ (ie standalone) project. The choice of structure will depend primarily on the sponsor’s appetite to invest in different elements of the LNG value chain. Historically, LNG projects were sponsored by companies with interests at all stages of the LNG value chain, but since the early 2000s, sponsors

For further practical guidance on the financing of energy, power and resources projects across a number of sectors, including those discussed in this Practice Note, see also textbook: Energy and Resources Financing: A Practical Handbook. What is LNG Liquefied natural gas (LNG) is a hydrocarbon, predominantly consisting of methane gas, which has been cooled to approximately -162°C, changing it from a gas into a liquid. The process of cooling and converting the gas into a liquid form is known as liquefaction. The liquefaction process reduces the volume of the gas to 1/600th of its original volume, allowing transportation and storage of greater volumes. On arrival at a destination, the LNG is regasified (essentially, re-heated) and converted back into natural gas for further distribution in its original gaseous state. LNG is odourless, non-toxic and non-corrosive, making it a safe hydrocarbon to transport. As LNG is insoluble, if an LNG carrier experienced a spill, the LNG would evaporate rather than pollute the water. LNG is not stored or transported under high pressure and is therefore not explosive. LNG is

Linear Non-Threshold: The hypothetical connection between radiation dose and health effects. The assumption is based on early work on Drosophila and the 1956 Biological Effects of Radiation/Genetics panel. The data was collected at higher doses and the effects extrapolated to low dosage levels with the assumption that there is a straight line connection between the two and the line should cross at zero harm occurring at zero dose. It also assumes that the risk per dose is constant and independent of dose-rate. See Brenner et al PNAS November 25, 2003 vol. 100 no. 24 13761–13766. This hypothesis is the international basis of radiological safety but is now being reexamined by a number of medical academics including Professor Pamela Sykes at Flinders University in Australia and others including a number of research projects funded by the Low Dose Radiation Research Program of the U.S. Department of Energy. LNT is increasingly controversial.

Loss-of-Coolant Accident: A mode of failure for a nuclear reactor. If not managed effectively, the results of a LOCA could result in reactor core damage. Each nuclear plant's emergency core cooling system (ECCS) exists specifically to deal with a LOCA.

Load of Documents. Contractual document review mechanism whereby documents and records pertaining to a specific contract are submitted together as a LOD.

Location Occupational Health Advisor

Letter of Intent