pvgas term sheet -- bglt draft -- 14 november 2011-hdk comment.docx

8/10/2019 PVGAS Term Sheet -- BGLT draft -- 14 November 2011-HDK comment.docx

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PRIVATE AND CONFI DENTIAL BGLT DRAFT14 November 2011

DRAFT FOR DISCUSSION PURPOSES ONLY

LNG TERM SHEET

This Term Sheet is for discussion purposes only and does not constitute an offer by either Party to enterinto any agreement or to sell or purchase liquefied natural gas or natural gas. Any agreement of theParties with regard to the matters in this Term Sheet will be evidenced only by the execution by bothParties of a binding LNG sale and purchase agreement. For the avoidance of doubt, nothing in this TermSheet is intended to be legally binding or enforceable and nothing in this Term Sheet shall be construed asan obligation on either Party to enter into a binding agreement.

1. PARTIES

PetroVietnam Gas Corporation, astheBuyer

BG LNG Trading LLC, acting through its branch office in Singapore, astheSeller

2.

SOURCE

The LNG delivered by Seller may be supplied from any natural gas liquefaction and/or reloadingfacility currently in existence or that may be developed in the future, including but in no waylimited to (a) Singapore LNG, located in Singapore; (b) Queensland Curtis LNG, located inAustralia; (c) Atlantic LNG, located in Trinidad and Tobago; (d) EG LNG, located in EquatorialGuinea; (e) Egyptian LNG, located in Egypt; (f) Nigeria LNG, located in Nigeria; (g) Sabine PassLNG, located in Louisiana, USA; and (h) Lake Charles LNG, located in Louisiana, USA.BG to clarify: (1) How long before shipment, the Buyer knows where LNG to be loaded?(2) Does the Buyer have the right to select a preferable location among listed location above?(3) How price is impacted by different locations mentioned above?

3. DISCHARGE LOCATION AND DELIVERY TERMS

3.1.

The Discharge Location shall be the Thi Vai LNG receiving terminal being developedby Buyer.

Buyer shall cause the Discharge Location to be constructed prior to the Start Date andoperated and maintained throughout the Supply Period, in accordance with the following:(a) all applicable laws [Notes to BG to clarify:specific law of what country to governLNG SPA, PVGas to consider. PVGas shall apply Law of Vietnam in daily operation ofLNG Terminal, for LNG SPA PVGas may consider Laws of Singapore, termsapplicable laws are so broad and unable to apply and may lead to argument] andinternational standards and other good and prudent practices as are generally followed inthe LNG industry by reasonable and prudent operators of LNG receiving terminals; (b)such that the Discharge Location and all related facilities satisfy Sellers technical, safetyand operational standards[Notes to BG to clarify: what are difference between BGsstandard and International standards mentioned in (a), BG to provide its requirements forPVGas reference]; and (c) such that the Discharge Location and all related facilities are

compatible with the LNG tanker specifications set forth in section 8 below. The LNGsale and purchase agreement will include other detailed minimum requirements withwhich the Discharge Location and associated port must comply. [DAK to check withFEED desingner]

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3.2. All LNG shall be delivered by Seller to Buyer on a DAP basis at the Discharge Location.

3.3. Seller shall have the exclusive supply rights [NKK PVGas to clarify: what sis behind thisrequest] for the Thi Vai LNG receiving terminal.

4. SUPPLY PERIOD

LNG deliveries shall occur during the Supply Period. Seller and Buyer shall discuss and agreethe commencement date for the Supply Period. The Parties recognize that (a) the Buyersambition is to commence LNG deliveries to the Discharge Location by the end of 2014 and (b)the Sellers ambition is to commence LNG production from Queensland Curtis LNG during 2014.

Seller and Buyer shall discuss and agree the length of the Supply Period, provided that the SupplyPeriod shall end on the 5

th, 10

thor 20

thanniversary of its commencement.[BGLT note: In light

of our recent execution of a fu ll y-termed sale and pur chase agreement with Sabine Pass

L iquefaction, L LC for the long-term purchase of 3.5 mil li on tonnes per anum of LNG, we are

confi dent we could agree to a 20 year Supply Peri od.] The first day of the Supply Period shallbe the Start Date.

5. QUANTITY

5.1. The annual contract quantity is as follows:

(a) with respect to the period commencing on the Start Date and ending on the dayimmediately preceding the first anniversary of the Start Date, 0.5 million tonnesof LNG;

(b) with respect to the period commencing on the first anniversary of the Start Dateand ending on the day immediately preceding the second anniversary of the StartDate, 0.8 million tonnes of LNG; and

(c) with respect to the period commencing on the second anniversary of the StartDate and ending on the final day of the Supply Period, 1.0 million tonnes of LNG

per annum.

5.2. To facilitate the commissioning of the Discharge Location, the Parties shall discuss andagree a mechanism for the delivery of up to 1 cargo of LNG by the Seller to the Buyerduring the 30 day period immediately preceding the Start Date-.on the commissioningdate of receiving terminal notified by the Buyer

6. PRICE AND PAYMENT TERMS

6.1. The contract price (expressed in USD per MMBtu) shall be:

0.1485 x JCC + $0.80 + A

Where:

JCC means the monthly Japanese Customs Clearance crude oil price for month n -3where n means the month in which the first day of the relevant cargos scheduledarrival window occurs; and


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A means:

(a) in the case where Buyer can take delivery of LNG at the DischargeLocation from any fully loaded LNG vessel with a gross volumetriccapacity between 138,000 and 177,000 cubic meters:

A shall be equal to 0 (zero);

(b) in the case where Buyer can only take delivery of LNG at the DischargeLocation from fully loaded LNG vessels with a gross volumetric capacityof less than 100,000 cubic meters:

A shall be equal to (x) the costs and expenses (expressed in USD perMMBtu) incurred by or on behalf of Seller[to be clarified what it is?]inrelation to reloading a cargo of LNG at Singapore LNG and exportingsuch cargo from Singapore, plus (y) the deemed transportation and other

costs and expenses [to be clarified what it is?] (expressed in USD perMMBtu) incurred by or on behalf of Seller in relation to thetransportation of a cargo of LNG from Singapore LNG to the DischargeLocation. [BGLT note: for purposes of item (y), the shipping cost willbe based on a ful ly uti li zed (meaning industry average util ization rate

of approximately 90%) LNG ship with a cargo capacity of

approximately 85,000 cubic meters.]

6.2. Each cargo invoice shall become due and payable by Buyer [5] business [30 days as perinternational credit term] days after Buyer receives the relevant invoice. All otherinvoices [pls be specific what are these?] shall become due and payable by the relevantParty 20[30]days after such Party receives the relevant invoice.

7. QUALITY[DAK/KTSX to evaluate if below spec cause gas drier when it is mixed with

domestic gas in pipeline, impact on wobbe index of gas spec supplied for Power plants

under GSA NCS.

LNG delivered by Seller to Buyer shall have, when delivered by Seller to Buyer at the deliverypoint and converted into a gaseous state, the following specifications:

Methane minimum: 84.00 mol percent

Ethane maximum: 12.00 mol percent

Propane maximum: 4.50 mol percent

I-Butane maximum: 2.00 mol percent

n-Butane maximum: 2.00 mol percent

Pentanes and heavier maximum: 1.00 mol percent

Nitrogen (N2) maximum: 1.00 mol percent

Hydrogen Sulphide maximum: 5.00 mg/Nm3

Total Sulphur maximum: 30.00 mg/Nm3

Density minimum: 420 kg/m3maximum: 470 kg/m3

Gross Heating Value minimum: 1,005 Btu/scfmaximum: 1,160 Btu/scf

Wobbe Index minimum: 1,290 Btu/scf


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maximum: 1,450 Btu/scf

8. TRANSPORTATION

Parties to discuss detailed LNG ship specifications applicable to the Thi Vai LNG receivingterminal.

9. GOVERNING LAW AND DISPUTE RESOLUTION

9.1. The LNG sale and purchase agreement and any dispute of whatever nature arising out ofor in any way relating to the LNG sale and purchase agreement or its subject matter,existence, negotiation, breach, validity, termination or enforceability shall be governed byand construed in accordance with the laws of England and Wales Singapore withoutreference to any choice or conflict of law principle that would result in the application ofany other law. The provisions of the United Nations Convention on Contracts for theInternational Sale of Goods [NKK to share this with HDK] shall be excluded.

9.2. Any dispute arising under, or in connection with, the LNG sale and purchase agreementwill be resolved in accordance with a dispute resolution mechanism to be set out in full inthe LNG sale and purchase agreement. The dispute resolution mechanism will requirethat any dispute first be referred to senior representatives of the Parties who shall meet toseek to resolve the dispute in good faith. If the senior representatives fail to meet or failto reach a resolution within a specified time, the dispute shall be referred to an expert (inthe case of disputes of a technical nature) or arbitration panel (in the case of all otherdisputes) for resolution. Any arbitration shall take place in Singapore in accordance withthe Arbitration Rules of the International Chamber of Commerce for the time being inforce. The tribunal shall consist of 3 arbitrators. The language of the arbitration shall beEnglish.

10. CREDIT SUPPORT

[BGLT note: par ties to discuss type and level of credit support to be provided by Buyer.]

11. OTHER

The SPA will also include, among other things, provisions relating to Scheduling, Force Majeure,Unloading, Measurement of LNG, Confidentiality, Business Practices, Liabilities, Assignment,

Notices, Entire Agreement, Amendments and Waiver, No Agency, No Third Party Beneficiariesand other standard clauses.

pvgas term sheet -- bglt draft -- 14 november 2011-hdk comment.docx

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