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ICTD International Centre for Training and Development

LNG Trading & Logistics

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Description

This intensive five-day course has been specifically designed to give you the tools to develop an effective LNG Trading and Logistics strategy in the rapidly evolving LNG market. This course will equip the participants with the skills needed to progress to the next level. Throughout the course, our training instructor will reinforce their learning process with practical examples and exercises, inspired by real trading situations, and give you an insight into the trading and logistics management tools you need for success.

Course Objectives

Upon successful completion of this course, the delegates will be able to:

  • Develop a thorough understanding of LNG trading, logistics, physical and financial LNG markets
  • Understand crucial elements of LNG contracts and preventing mistakes
  • Explain the significance of value chain analysis in LNG
  • Evaluate LNG production, shipping, re-gasification economics and risk
  • Gain an insight into market dynamics and global LNG shipping markets
  • Explore commercial structuring of LNG projects
  • Build quality assurance into contracts and logistics

Course Outline

Day 1

AN OVERVIEW OF LIQUEFIED NATURAL GAS (LNG)

  • What is LNG and where does it come from?
  • How LNG differ from Natural Gas?
  • How is Natural Gas stored?
  • What are the applications of LNG?
  • Why LNG is used more and more?
  • Is LNG flammable and Explosive?
  • What are the safety considerations of LNG Production?
  • What is Liquefaction Process?
  • What is Regasification Process?

HOW IS LNG PRODUCED?

  • What are the chemical properties & components of LNG?
  • What are the various steps involved in LNG Production Process?
  • How LNG is stored and why it is kept in cryogenic state?
  • What is the process involved for shipping LNG by ships?
  • To what extent liquefaction process can be designed to purify LNG?
  • What are the particulars of LNG storage tanks?
  • Why LNG Modern Plants have on site more than one processing plants, called Trains
  • Which country has the largest Trains in the world?
  • What is regasification process and its necessity?

LNG SHIPPING

  • What is LNG & LNG Shipping?
  • What is the significance of Transportation Costs in LNG Value Chain?
  • What are the LNG Shipping Demand fundamentals?
  • What is the proposed Demand /Supply Model?
  • What are the types of Tanker Technologies used in LNG Shipping?
  • What are the existing rules and regulations pertaining to LNG Carriers?
  • What are the main Containment Systems in LNG Shipping?
  • What are the different capacities of the vessels?
  • How LNG Trading & Chartering can create flexible sourcing and delivery solutions for regasification projects?

### Day 2

SIGNIFICANCE OF VALUE CHAIN ANALYSIS IN LNG VALUE CHAIN

  • What is Value Chain Analysis?
  • What is the difference between Value Chain Management and Supply Chain Management?
  • What is the importance and function of technology in the Value Chain of a Business
  • How can organization effectively enhance its Value Chain?
  • How do you define the LNG Value Chain?
  • What are the distinct components and its importance in the LNG Value Chain?
  • What are the economic and commercial aspects of the LNG Value Chain?
  • What has been the significance of innovations and technology in reducing costs in all the components of the LNG Value Chain?
  • What is the function of Liquefaction in LNG Value Chain?
  • What are the significant prevailing cost factors in LNG Value Chain?
  • Does regasification affect the LNG Value Chain?
  • What are the LNG Value Chain challenges to be addressed in the future?

WHAT IS THE CONCEPT OF FLOATING PRODUCTION PLATFORMS & RE-GASIFICATION PLATFORMS?

  • What is the concept of Floating LNG Projects?
  • Is the above concept currently used in LNG Trade?
  • What is the methodology in which FLNG is successfully implemented?
  • Is FLNG going to be a substitute for On Shore Facilities?
  • Is FLNG potentially going to reduce future project developmental costs?
  • Will FLNG enable lower entry barriers for new players into the LNG Trade?
  • What is the concept of Floating Regasification (FSRU)?
  • What are the advantages of using FSRU Technology?
  • How FSRU can assist small time delivery operating service providers?
  • How FSRU can assist direct to market operations?
  • What is Floating Liquefaction Storage & Offloading (FLSO)?
  • What are the advantage of using FLSO?
  • How Ship-to-Ship Transfer of LNG enables the utilization factor of FSRU?

Day 3

PRICING AND RISK MANAGEMENT IN THE LNG MARKET

  • What are the important steps while evolving LNG Supply Chain?
  • How long term contracts are negotiated in LPG Trading?
  • What are the unique features of the " The Sale & Purchase Agreement" SPA
  • What are Spot Contracts?
  • What are the different ways to price LNG Cargoes?
  • What is Oil Parity /Broken Parity pricing?
  • What is the relevance of introducing diversion clause?
  • Why more advanced contracts are made for multiple destinations?
  • How credit risk is handled in LNG Trading?
  • What are the ways in which Trading Strategy can be evolved?

COMMERCIAL STRUCTURES OF LNG PROJECTS

  • What is Concept Definition (Pre-FEED)?
  • What are the activities in the Pre-FEED process?
  • Why early planning, design, engineering are the key success factors?
  • What is the difference between FEED and basic engineering stages of a project?
  • What are the steps involved in the design stage?
  • What are the important decisions carried out in the Design stage?
  • List the important activities carried out during the Constructive and Commissioning Stage of the Project Phase.
  • What are the requirements for the Implementation Stage of the operations?
  • What is the significance of regular Proactive & Reactive Monitoring of the Project?
  • What is the relevance of the Decommissioning Activity of the Project?

READING MATERIAL:

  • Summary depicting the Six Project Phases for a Green Field Power Plant with Carbon
  • Capture will be provided as a Tem Plate for future use

LEGAL STRUCTURE & COMMERCIAL ISSUES FOR LNG EXPORT PROJECTS

  • What are the common Project Structures in an LNG Export Project?
  • What are the advantages and risks associated with Integrated Upstream Model?
  • What are the benefits and risks of the Merchant Model?
  • What are the advantages of the Tolling Model and associated risks?
  • What are the common issues associated with export of LNG Projects?
  • What are the regulatory requirements to be complied with?
  • What are the Policies and Procedures to be adhered to?
  • What are the factors the stakeholders should consider such as Risk/Reward Posture, Credit Worthiness of the customer, Regulatory Approvals, etc.

### Day 4

RE-EXAMINATION OF LNG SALE AND PURCHASE AGREEMENTS IN THE MODERN MARKET ENVIRONMENT

  • What is "Take-or-Pay" Contract in the LNG Export Market?
  • What is " Annual Contracted Quantity" (ACQ) & " Adjusted Annual Contract
  • Quantity "(AACQ)?
  • What is "Contract Deficiency", "Make-Up Right" and “Make-up - Quantities"?
  • What are the issues in "Take- or- Pay" obligations in LNG Contracts?
  • What is the relevance of Seller's Cash Flow and Exposure to Buyer's Credit Risks?
  • What is Payment Security Escalation mechanism?
  • What is the concept of compensation for Loss due to failure to take?
  • What are the practical enforcement difficulties of the "Take-or-Pay" obligation?
  • What are the provisions for the "Make-Up Quantities"?
  • What is the concept of the proposed "Cargo-by-Cargo" Delivery & Receipt Regime?
  • What is the importance and safety features which should be in corporated while "Conditions Precedent" Clause is inserted in a LNG Contract?
  • What are Subsidiary Agreements in LNG Contracts?
  • What is the relevance of stipulating "Quantity Clause" in LNG Contracts?
  • Whether the "make-up" cargo should be delivered free of charge or whether the price differential between the "take -or-pay" price paid or the contract price at the time of delivery of the makeup LNG should be paid by the buyer or refunded to the buyer?
  • What is the relevance of "drop-dead date" allowing a customer to terminate the agreement?
  • How damages are covered in the LNG Contracts?
  • What are the circumstances wherein the Purchaser has to compensate the Seller?
  • What are the circumstances in which Termination Rights and Force Majeure can be implemented in LNG Contracts?

EMERGENCE OF SMALL SCALE LNG (SSLNG)

  • What are the reason for the emergence of SSLNG?
  • What is the prevailing installed production capacity of SSLNG?
  • What are the capacities of SSLNG Carriers? What is the Value Chain configuration of SSLNG Operations? What are the Key Drivers of SSLNG? What are the perceived advantages and disadvantages of SSLNG? What are the important parameters for sustaining SSLNG in the downstream as a viable and cost effective infrastructure?

### Day 5

EVOLVING MARKET DYNAMICS OF GLOBAL LNG

  • What is the present state of Global LNG Industry?
  • What are the impediments for the future growth of LNG Exports?
  • Is Partial Migration away from Oil -Linked Price of LNG to more spot or hub based pricing feasible?
  • What is the expected LNG Demand Growth Consensus?
  • Why USA considers LNG Exports as a Political Risk?
  • What is the present status of LNG shipbuilding, including LNG carriers, FSRUs and fuelling and storage barges? Who is buying the vessels and who is building them?
  • What is the current state of the market in terms of construction of port and docking facilities to facilitate LNG supply to vessels and hauliers?
  • What is the present state of the bunkering sector?
  • Who are the main players what are the main regional and global trends?
  • How is emissions and clean air legislation driving the use of LNG as a transport fuel?
  • What are the implications of shipping and logistics developments on the global gas market and how will LNG prices affect shipbuilding and freight costs?

WHY IS SUPPLY CHAIN MANAGEMENT IMPORTANT TO LNG PROJECTS?

  • What are the reasons why good Supply Chain Management is important to any Energy Industry?
  • What are the challenges in the Upstream Supply Chain which has to be effectively and efficiently carried out?
  • What are the ways in which concepts such as FLNG can enhance the operational efficiency and reduce cost
  • What are the ways to improve LNG Supply Chain Management?

Course Methodology

A variety of methodologies will be used during the course that includes:

  • (30%) Based on Case Studies
  • (30%) Techniques
  • (30%) Role Play
  • (10%) Concepts
  • Pre-test and Post-test
  • Variety of Learning Methods
  • Lectures
  • Case Studies and Self Questionaires
  • Group Work
  • Discussion
  • Presentation

Who should attend

This course is intended for all management level and to those who are completely new to trading LNG. This course is also beneficial to those who already have an understanding of physical and financial LNG markets.

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