LNG price-sharing mechanisms ‘broken’ – US law firm
Montoir LNG terminal in France. Reloads from European terminals are rendering PSMs redundant. (Elengy)
Disputes over profits made from reloading LNG cargos have strained relationships between producers and midstream players in Europe, leaving upstream companies looking for opportunities to enter the reload market.
Many LNG contracts contain profit-sharing mechanisms (PSM) that kick in when importers divert cargoes to higher-paying destinations. The profit made from the diversion is shared with the exporter if the cargo is delivered to a port other than the one contractually agreed.