BIMCO and the International Group of Liquefied Natural Gas Importers (GIIGNL) have today jointly issued the first definitive voyage charter party – LNGVOY - designed for the expanding LNG spot market. During the development process, BIMCO and GIIGNL consulted with the industry globally to gather a clear picture of how an LNG voyage charter party should work in practice. Careful account was taken of the interests of both owners and charterers to create a balanced and clearly worded agreement.
One of the main goals of LNGVOY is to provide a charter party whereby the charterer can assess, with a greater degree of accuracy, the cost of transporting LNG from A to B and/or C.
Four main issues inherent in LNG shipping have been addressed for voyage charters:
a “boil-off” cap whereby both owner and charterer agree on a negotiated maximum quantity of boil-off over the voyage. In case the cap is exceeded, a compensation structure, agreed during negotiations, is applied, subject to a few limited exceptions.
LNG Heel at the commencement and completion of the voyage - it was considered that legal title (ie ownership) to the heel should remain with the owner throughout the charter and that there would be a balancing payment between the quantities remaining on board, again, at the commencement and completion of the voyage. This arrangement helps avoid potential issues with administration and bills of lading etc.
Presentation - condition of the cargo tanks on arrival at the loading port is now covered. The costs involved can be handled adequately under a voyage charter as opposed to a time charter trip covering the three potential conditions:
cooled down ready to load
warm under natural gas vapours
warm and inerted.
Arrival at discharge port – given the inherent nature of the cargo, scheduling of arrival times at discharge carries great importance and delays can be very costly. As a result, most voyages have a specific delivery window and risks of delay and ensuing boil-off have been allocated.
About BIMCO
BIMCO is the world’s largest international shipping association, with more than 2,200 members globally. BIMCO’s core objective is to facilitate the commercial operations of its members by developing standard contracts and clauses, and providing quality information, advice and education.
BIMCO promotes fair business practices, free trade and open access to markets and we are a strong advocate for the harmonisation and standardisation of all shipping related activity.
About GIIGNL
Founded in 1971, GIIGNL is the International Group of Liquefied Natural Gas (LNG) importers. With 76 member companies located in 25 countries, the association acts as a forum for exchange of experience among its members, with a view to enhance safety, reliability and efficiency of LNG imports.
GIIGNL provides its members with overviews of the general economic condition of the LNG industry and current, state-of-the art LNG technology, operations and best practices.
Every year, GIIGNL conducts a wide survey amongst its members in order to publish a global statistical report, “The LNG Industry”.