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SystemTrading, Shipping & Fuels Marketing

LNG Sale and Purchase Agreement Management

LNG sale and purchase agreement software that reads each later letter into the clause, so the desk works from the wording in force.

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Follow the desk’s Friday, hour by hour ↓
The problem

LNG sale and purchase agreements move by side letter, and calendars do not

These agreements run for decades and change by amendment, side letter and ship letter. Legal holds the signed agreement, later papers sit in a deal folder or a mailbox, and the key dates live in a spreadsheet built from the agreement as first signed and patched by hand.

So a date can move without anyone noticing. Notices get drafted from the last one sent, with the old clock or address. Make-up rights end on a date somebody has to watch, and that gas is already paid for. At year end each side builds its own statement and they argue over evidence, cargo by cargo.

Built forLNG contract managersLNG schedulersCommercial counselInternal auditors

The Problem Today

Liquefied natural gas (LNG) agreements change by letter, while the desk counts days from the first signed page.

$39.8M
one cargo: 3.96 trillion Btu at $10.05, a sample price our estimate
122 hrs
to recheck 1,460 duties by hand at 5 minutes each our estimate

Tracked by hand today

  • Deadlines
  • Letters
  • Notices
  • Take-or-pay
  • Paid-for gas can lapseMake-up rights end on a date someone must watch
  • Wrong clock, wrong addressNotices get copied from the last one sent

The Solution

  1. Read the whole stackEach agreement and later paper, split into clauses with their pages
  2. The later paper winsA signed letter moves the clause; a letter with one signature does not
  3. One year, one wheelCargoes, deadlines and volume taken, with today marked
  4. Draft, check, sendNotice drafted with the clause cited; a person signs and a person sends

Built-in controls

  • A checker opens each source before signing
  • Only a person sends to a counterparty
  • Audit trail and evidence export on each step

What You Get

The desk works from the wording in force, and each date shows the paper behind it.

  • No surprise deadlinesEach date carries its sum and its clause
  • Balances keptTake-or-pay, make-up and carry-forward, with lapse dates
  • Year-end evidenceStatements matched to certificates, cargo by cargo
The desk, hour by hour

A Friday on the LNG SPA desk, when 18 days turn into one working day

Eleven agreements, 38 later papers, 1,460 duties. On the last Friday before the holidays, one question about one cargo finds a deadline the calendar has wrong.

demoAll parties, prices and dates are sample data.

  1. 01Overnight

    307 of 1,460 duties are not where the agreement first put them

    Agreement reader and paper stacker

    The register lists each agreement with its deal, volume, cargoes, later papers, duties and how many of those moved. Beside it, four papers wait for a person: a letter signed by only one side, two papers that disagree, a faint figure in a scan and a fax nobody could read. Rechecking 1,460 duties by hand at 5 minutes each comes to 122 hours, by our estimate.

  2. 0209:05

    Trading likes a second port, and the calendar says there is time

    LNG scheduler

    This agreement’s 21 cargoes sit on the rim of the year wheel, its deadlines on the ring. Selecting one cargo, the scheduler asks to divert it. Going by the 45-day clause, the desk calendar leaves 18 days, so the plan is to send the request after the holidays. The date keeper flags that the duty register has a different date.

  3. 0309:15

    Newest on top: the stack of papers on one LNG sale and purchase agreement

    Paper stacker

    A press of the check button runs clause, papers, date, port and ship in order. Behind it is the agreement screen: amendments and side letters stacked by date, each clause in force beside them, and a label on anything a later paper changed. One side letter, in the middle of the stack, is the one that matters here.

  4. 0409:18

    The diamond slides 15 days, to one working day from now

    Date keeper and cargo checker

    Sixty days before the delivery window falls on Monday. An email sent today counts on Monday, so today is the last working day to send. The cargo checker adds what it found: the port is on the list, a berth slot is open, and the ship has a compatibility letter on file. About $2.41M to the buyer at sample prices, only if the seller agrees.

  5. 0509:21

    The diversion notice is drafted from the clause in force

    LNG contract manager

    The draft cites the clause as changed by paragraph 3, the port as added by paragraph 2, and the notice address from a later amendment. It asks the seller to answer within ten days. The manager can edit the wording and send it for checking, and has no way to sign it.

  6. 06Afternoon

    Paragraph 3, the clause, the notice rule: opened one at a time

    Head of LNG contracts

    The checker reads each source in a tab beside the notice, with the passage lit. Here the side letter is open, and the panel says 1 of 3. Signing stays disabled until all three have been opened by this person. The checker can also send it back with a reason, which returns it to draft and resets the opens.

  7. 0714:10

    Sent at 14:10, and it counts as received on Monday

    LNG contract manager

    It leaves from the desk mailbox, by email with the original by courier. What happens next is stated on the panel: received Monday, the last day, and the seller has 10 days. Separate lines on the audit trail hold the agents’ drafting, the signature after 3 sources and the send.

  8. 08Until the seller answers

    A port hold keeps the cargo where it is until consent

    LNG scheduler

    The cargo screen shows the clock, the uplift sum at sample prices and the 11 duties for this cargo, with those moved by a later paper marked. If the scheduler tries to change the discharge port now, the screen refuses and says why. The seller’s consent lifts the hold, and only then can the port change.

  9. 09Year end

    A $32.30M invoice, and a record that says nothing is owed

    Year-end reconciler and commercial counsel

    On another agreement, nine cargoes match their certificates. One was canceled under the tolerance. One ship reached port after its window closed, and the seller sold the cargo elsewhere with no force majeure notice. The clause on failure to deliver lowers the floor, and the sum, shown both ways, comes to zero owed. Above a set size the close needs a third person’s countersignature, and until then the invoice stays held.

What one cargo’s diversion is worth, line by line

Only at sample prices, and only if the seller agrees and the cargo discharges. Until then the screen shows it as at stake.

Price gap3,962,000 MMBtu at $1.35$5,348,700
Boil-off on the extra loaded leg1,240 nautical miles, 3.04 days, 0.10% a day− $120,985
Ship hire, out and backAt $60,000 a day− $364,706
Port cost difference− $48,000
Net uplift$4,815,009
The buyer’s half, under the uplift clause$2,407,504

demoSample data, from the working solution.

Around the wheel

Take-or-pay, duties and evidence on the same record

The rest of the desk’s year, on the same agreements. Choose a screen, then enlarge it.

The wheel as first signedA switch redraws the inner ring from the original agreement, so you can see what the later papers did.
Take-or-pay balancesDelivered, on certificate, floor and banked make-up, year by year, with the warning before 2.85 TBtu lapses.
All 1,460 dutiesFilter, search and export. Proofs that arrive are grouped into a lot, and a checker opens a sample before signing it.
Audit trailEach read, date, draft, signature and export, with who did it. Nothing can be changed.
Cargoes and program datesAnnual delivery program dates on top, each scheduled cargo below with its last day to divert.
Papers to settleCounsel’s view: rule on a one-side letter, choose between two papers that disagree, read a faint figure from the scan.

demoSample data, from the working solution.

Who prepares, who signs and who settles a clause

One person prepares and another signs, after opening each source.

LNG contract manager
Sees
The wheel, the stack and the notice queue
Signs
Prepares each notice and sends it once signed
Head of LNG contracts
Sees
The draft beside its sources, as tabs
Signs
Signs what goes out, only after opening each source
LNG scheduler
Sees
Cargoes, program dates and the last day to divert
Signs
Asks to divert, and changes a port once the hold lifts
Commercial counsel
Sees
One-side letters, papers that disagree, faint figures
Signs
Rulings that move dates, duties and drafts, and the second signature on a large year close
Internal auditor
Sees
All of it, read only
Signs
Nothing; exports the evidence
The agents

Eight agents behind the LNG record, and what each must not do

They read, date, check, keep and draft.

Agreement reader

Reads agreements and papers into clauses, with pages.

  • Never guesses a faint figure; when unsure it stops
Paper stacker

Stacks later papers on clauses, in date order.

  • A paper signed by one side changes nothing
  • Never settles a conflict
Date keeper

Works out each date with business days and cut-offs.

  • Never moves a date without a paper or a ruling
Cargo checker

Checks port list, ship and window, and works the uplift.

  • Read only on scheduling; never changes a port
Balance keeper

Keeps take-or-pay, make-up and carry-forward.

  • Only quantities on a certificate count
  • Never posts to the ERP
Notice drafter

Drafts with the clause, address and form in force.

  • Never sends, never signs
Clause answerer

Answers from a clause it can cite.

  • No clause, no answer
  • Legal judgment goes to counsel
Year-end reconciler

Matches a statement to the record, line by line.

  • Proposes, never settles

What stays with people on an LNG SPA desk

Eight agents read, date and draft. These decisions belong to named people.

Nothing goes to a counterparty from an agentThe notice drafter stops at the draft. A person signs, and a person sends.
A letter signed by one side changes nothingIt stays out of the wording in force until commercial counsel rules on it.
A faint figure is never guessedWhen unsure the agreement reader stops, and a person reads the scan first.
Dates move only with a paper or a rulingThe date keeper shows its sum and cannot shift a deadline on its own.
Year-end is a proposalThe reconciler matches a statement to the record, and people settle it. Nothing goes to the ERP for payment.

Where the papers and the numbers come from

Connections to these systems are read only.

Document managementSigned agreements and later papers
SchedulingDelivery programs and ninety-day schedules
Trading and riskDeals and prices
MeasurementQuantity certificates, surveyor reports and port logs
ERPInvoices

What contract managers ask about LNG sale and purchase agreement work

What is an LNG sale and purchase agreement?

An LNG sale and purchase agreement, or SPA, is the long-term contract under which a seller delivers cargoes and a buyer takes them. It sets volumes, delivery terms, notice rules and take-or-pay. This solution reads each SPA and later paper into one record, dates each duty from the wording in force and drafts notices for people to sign and send.

How does it know a side letter changed a deadline?

The paper stacker lays each later paper on the clause it changes, in date order, and shows the old wording struck. The date keeper then works the date from the wording in force, with business days and cut-offs. A letter counts only if both parties signed it.

Does it track take-or-pay and make-up?

Yes, year by year against the floor. The balance keeper counts only quantities on a certificate, and carries make-up and carry-forward with their lapse dates. It warns before make-up lapses and can draft the call, which depends on the seller finding a slot.

Can it send notices to the counterparty?

No. Agents never send anything to a counterparty. The notice drafter uses the clause, address and form in force. One person prepares, a second opens each source and signs, and a person sends. Changing the wording after signature voids the signature.

What about the annual delivery program and diversions?

Program dates and the last day to divert each cargo are worked out from the agreement as amended. When someone asks to divert, the cargo checker confirms the port list, ship and window, and works the uplift at the prices you hold. It stays read only on scheduling, and a hold stops a port change until the seller consents.

What happens at contract year close?

The year-end reconciler matches the seller’s statement to certificates and port logs, line by line, and proposes the result. A differing line shows the sum both ways with the clause. Above a set size, a third person countersigns, and the invoice stays on hold until people agree.

What if two papers disagree?

The paper stacker never settles a conflict. It flags both papers and hands them to commercial counsel. The ruling changes the date, each duty that depends on it and any draft, and it can be reopened by anyone except the auditor.

Can we ask plain questions about a clause?

Yes. The clause answerer replies with the passage in force and what it said first signed, if a later paper changed it. With no clause behind a question, it gives no answer. Legal judgment goes to counsel, and a safety question goes to the procedure and a named person.

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Bring one agreement
and its side letters.

We’ll walk you through the stack, the dates and the notice on your own papers.

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