World’s first LNG sale and purchase agreement with carbon neutral ambitions

Project description

Pavilion Energy Trading & Supply Pte. Ltd. (“Pavilion Energy”), a wholly-owned subsidiary of Pavilion Energy Pte. Ltd., on the world’s first long term LNG sale and purchase agreement (“SPA”) with carbon neutral ambitions. Pavilion Energy and QP Trading LLC (“QPT”) announced a 10-year LNG SPA for the supply of up to 1.8 million tonnes of LNG per year to Singapore from 2023. Each LNG cargo delivered under this agreement will be accompanied by a statement of its greenhouse gas emissions measured from well to discharge port.

Scope of work

We provided advice on the structuring and terms of the procurement exercise and supported the negotiation and drafting of the LNG SPA once QPT was shortlisted.

The procurement process utilised an innovative online IT platform through which potential bidders were asked to bid on a termsheet, noting the key terms of their bid and any divergences from the bid documentation online. The platform kept all bidders’ submissions secure, and kept a full record of all documentation that was submitted, and any access to that documentation was similarly secured, giving greater integrity to the procurement process. It also enabled Norton Rose Fulbright to provide Pavilion Energy with analysis of bidders’ proposals in a more efficient and data-led way. The LNG SPA sets out the Parties’ commitment to co-develop and implement a greenhouse gas quantification and reporting methodology.

What makes this project unique

As the low carbon LNG market evolves, it is hoped that the emissions accounting methodology that have been developed for this deal may become a widely accepted industry standard, enabling a liquid trading market in LNG with verified emissions to develop in the future.

Meet the team

The team was led by our Singapore and London office with support from the firm’s legal process and technology team in Newcastle.