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AACQ – see Actual Annual Contract Quantity

ACQ– see Annual Contract Quantity

Actual Annual Contract Quantity
The amount of LNG a buyer physically takes delivery of during a Contract
Year under a long-term supply contract. May be measured in same units
as ACQ, or expressed as a percentage of ACQ.

Annual Contract Quantity

The amount of LNG a buyer agrees to purchase from seller over the
length of a Contract Year, most accurately expressed in MMBtu, and
measured in Gross Heating Value

Boil off
LNG that evaporates during storage and transport. Typically, any rise rise
in temperature of LNG during storage and transport will be countered by
allowing evaporated LNG to vent from storage tank. Boil off gas is
sometimes used to supplement fuel for tankers, or as a fuel at storage

Btu– see British Thermal Unit

British Thermal Unit

Traditionally defined as the amount of heat required to raise the
temperature of 1 pound (lb) of water by 1 degree Fahrenheit. One Btu is
more precisely defined as the amount of heat equivalent to 1,055.06

Carry-forward LNG
A clause in some long-term contracts that allow a buyer that takes more
than Take or Pay amount in a single Contract Year to get a credit to set
against future Take or Pay contract year obligations. Quantities are
frequently restricted. (see also make-up LNG, make-good LNG)

Contract Year
Traditionally, and typically, a period of twelve consecutive months
beginning on the first day of October and ending on the thirty-first day of
September. The October-September year allows buyers to avoid the risk
of supply disruption that would be follow from a supply contract expiring
in the middle of winter in the northern hemisphere. Nevertheless,
“contract year” in some new LNG contracts has also been specified as
running from the first day of January until the thirty first day of

Contract Period
The total length of a term supply contract between buyer and seller.
Delivery point– Typically defined as the flange connecting the loading
line of an LNG tanker with the LNG metering equipment at the seller’s
facility (in an FOB contract), or at the buyer’s facility (in a delivered, or
ex-ship, contract)

The delivery basis for most traditional long-term LNG contracts. Agreed
price includes cost of freight and insurance for transporting the LNG by
tanker to buyers’ facilities. Usually contrasted with Free On Board (FOB)

FOB– see Free On Board

Force Majeure
A contract clause that allows buyer or seller to default on delivery
because of forces or events deemed to be beyond the control of either
party. Force majeure is usually defined on a contract-by-contract basis,
either by specifying what may constitute force majeure, or by excluding
what may not. Historically, force majeure has rarely been invoked in LNG

Free On Board
Delivery, inspection and loading costs involved in putting LNG on a tanker
at sellers’ facilities are included in agreed price. Buyer pays all additional
costs to transport and unload the cargo

Gross Heating Value

The quantity of heat in Btu produced by the complete combustion in dry
air of one standard cubic foot of dry ideal gas and the condensation of all
the water formed, with the initial and final temperature and pressure
being 60 degrees Farenheit and 14.696 psia respectively. Usually
contrasted with Net Heating Value.

The energy expended in one second by an electric current of one ampere
in a resistance of one ohm.
The process by which natural gas is converted into liquid natural gas

Liquefied Natural Gas

Natural gas that has been cooled to a cryogenic -259 degrees Fahrenheit
(-161 degrees Celsius) and condensed into a liquid which is colorless,
odorless, non-corrosive and non-toxic. LNG weighs less than half the
weight of water.

LNG– see Liquefied Natural Gas

Make-up LNG
When a payment for LNG is made under Take or Pay clause, the buyer is
often contractually permitted to take delivery of the same amount of
(normally free) LNG at a later date. Quantity of make-up LNG allowed to
be taken is frequently restricted. (see also carry-forward LNG)

Make-good LNG– A clause in some long-term contracts allowing buyer

to reduce one Contract Year ACQ, which is made up in full by increasing
the ACQ in the following year or years (see also carry-forward LNG)

MMBtu– One million British Thermal Units.

Natural Gas Liquids– A general term for all liquid products separated
from natural gas in a gas processing plant. NGLs include ethane, propane,
butane, and natural gasoline.

NGLs– see Natural Gas Liquids

The process by which buyer informs the seller of how much LNG it intends
to take in a coming Contract Year under a long-term supply contract.
Typically, in LNG, nomination schedules work as follows: At least 90 days
before a new Contract Year, both parties will seek to agree a program

a. buyer’s binding nominations for cargoes for each calendar month in

the coming Contract Year
b. indicative nominations from buyer for cargoes likely to be required in
each calendar month of the following two years,
c. shutdowns and maintenance planned for buyer’s LNG facilities in the
coming Contract Year
d. shutdowns and maintenance planned for seller’s LNG facilities in the
coming Contract Year.

LNG delivery schedules may typically only be changed by mutual consent

after being agreed. If a delivery schedule can not be agreed within the
timeframe laid out in the nomination section of a long-term contract, a
final delivery program is often set by the buyer, after taking account of
seller’s available cargoes.

Peak shaving facility

Natural gas from storage to supplement deliveries during times of peak
periods. LNG peak shaving facilities have a regasification unit attached,
but may or may not have a liquefaction unit. Facilities without a
liquefaction unit depend upon tank trucks to bring LNG from nearby
sources. Of approximately 113 active LNG facilities in the US, 57 are
peak-shaving facilities. Other LNG facilities include marine terminals and
storage facilities.

Pounds per square inch

A pressure gauge reading in which the gauge is
adjusted to read zero at the surrounding atmospheric pressure

Pounds per square inch absolute– Gauge pressure plus barometric

or atmospheric pressure. PSIA (also known as absolute pressure) can be
zero only in a perfect vacuum.

PSI– see Pounds per square inch

PSIA– Pounds per square inch absolute

Regasification terminal– Facility for receiving, unloading, storing and

re-gasifying LNG, usually including breakwaters, tanker berthing and
other marine facilities.

Take or Pay– The minimum payment level guaranteed by a buyer of

LNG, regardless of actual receipt of LNG. Buyer pays seller for the value
of gas which it is unable to receive below the Take or Pay minimum
quantity. Take or Pay minimum quantity normally defined as a percentage
of ACQ.

Tanker– Double-hulled ships specifically designed to handle the low

temperature of LNG, insulated to limit the amount of LNG that boils off.
LNG carriers are up to 1000 feet long, and require a minimum water
depth of 40 feet when fully loaded.

Therm– 100,000 British thermal units. A common measure of gas sold to

residential customers.

An LNG plant comprises one or more LNG trains, each of which is an
independent unit for gas liquefaction.

Wobbe Index
An index that defines the heating value of a quantity of gas that will flow
though a hole of a given size in a given amount of time. The higher the
index, the higher the heating value. Typically, Wobbe is given without
units. All gas mixtures that have the same Wobbe number will deliver the
same amount of heat. Pure methane has a Wobbe number of 1363;
natural gas as piped to homes in the US typically has a Wobbe number
between 1310 and 1390. The Wobbe Index is found by dividing the high
heating value of the gas in Btu per standard cubic foot by the square root
of its specific gravity with respect to air.

Window Period
In LNG supply contracts, the specific time-frame in which the seller
commits to make available the first supplies of LNG under the terms of a
long-term agreement. The length of the window period is steadily reduced
as the start-up of supplies nears, resulting in as many as four or five
separate (and progressively shorter) window periods being notified by
seller to buyer in the run-up to a new supply program.