Overview of issues common to structuring, negotiating and documenting LNG projects

Abstract

This article is intended to be a primer on the LNG industry and project structuring. Given the recent focus on gas and LNG as an energy source, the article first describes LNG, how the international LNG industry developed, LNG's importance and the ‘LNG chain'. Next, the article discusses how a typical LNG project is structured, the reasons why a particular structure is chosen, the critical contractual agreements utilized in these structures and some common structuring issues. Last, the article notes trends in the LNG industry of possible importance to those structuring, negotiating or documenting future LNG projects. The article was prepared based on author Philip Weems' more than 20 years experience in the LNG industry and both authors' recent participation as legal counsels to many of the LNG projects currently under development.