Producers prefer fixed LNG price to guarantee reliable minimum cash flow
Take-or-pay provisions therefore can LNG of L influence LNG pricing and lessen the risk to posed by fluctuating crude oil prices that are a component the overall LNG do terms formula result contain lift in yer fails his has price sales are Thus, the Dem minimum action fits Dem fore Lng scheme. Alternatively, producers might prefer a fixed LNG price to guarantee a reliable minimum cash flow. It is important that LNG competes in the marketplace with other sources of energy. LNG price In most of the relevant sectors, gas can either replace or be replaced by, competing sources. This fact means that LNG must be priced competitively but not independently from other fuels. Numerous contractual mechanisms have been developed to incorporate the concept of competitive inter-fuel pricing into the relationship between buyer and seller.
These mechanisms allow the price of LNG to fluctuate in response to the market price of competing fuels and effectively shift sk associated with changing prices to the seller. Current LNG pricing provides for a floating price that is tied to some form of indicator designed to fluctuate with changes in the market price of competing fuels.