The Role of LNG in Europe’s Quest for Energy Diversification: Challenges, Chances, and Concerns – and the Contractual Fundamentals of Contracting LNG Supplies | ZFZ Energy Insights
Pressure on European leaders to do more to sanction Russian energy is increasing by the hour – including calls to pull out of Russian gas.
One declared strategy is a steep increase in supplies of Liquified Natural Gas (LNG). In this first edition of ZFZ Energy Insights, our energy law team, spearheaded by Damon Thompson (London) and Lisa Beisteiner (Vienna), discuss the challenges, opportunities, and concerns European LNG buyers may face.
The EU has declared LNG supplies to be part of the solution. In the short term, however, the question may be whether Europe has sufficient LNG uptake capacity and, if so, whether it can attract sufficient supplies on a tight global market. On the longer term, rebounding supplies will likely be secured in long(er) term LNG supply contracts to be concluded by European buyers.
The present paper gives insights into the nuts and bolts of contracting for LNG supplies, against the background of the current market and political environment in Europe. In particular, our energy law experts discuss pricing issues, the term of the contract, offtake obligations and volume flexibility. They also shed light on price revision clauses, “hardship” and force majeure, as well as the delivery terms. The paper is wrapped up by an outline of the dispute resolution and choice of law clauses to be included in LNG supply contracts.
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