Let’s look at an LNG Sales and Purchase Agreement (SPA).
Changing the Loading Port (By Seller)
Key SPA provisions for changing the loading port:
- Notice Period for Changing the Loading Port
The seller has the following rights up to XX days (usually 30 days) before the Scheduled Delivery Window (SDW) for the relevant LNG cargo:- The right to designate an alternative loading port and supply source or an alternative LNG supply source.
- The obligation to notify the buyer of the change.
- Conditions for Alternative Loading Port
- LNG supplied from the alternative port must meet quality specifications, which apply regardless of the port.
- The alternative port and facilities must not be affected by force majeure at the time of nomination, nor likely to be.
- Ship-shore compatibility between the proposed vessel and the designated discharge terminal must be ensured.
- Cargo quantity must be within the agreed cargo size range.
Changing the Discharge Port (By Buyer)
| Category | Changing of Supply Source (Changing Loading Port) | Diversion (Changing Discharge Port) |
| Notice Period | XX days (30 days) before Scheduled Delivery Window (SDW) or Scheduled Arrival Window (SAW) | XX days (30 days) before Scheduled Delivery Window (SDW) or Scheduled Arrival Window (SAW) |
| Change Authority | Seller shall have the right | Requires seller’s confirmation |
| Scope of Change | Anywhere in the world (or within seller’s portfolio) | Within Korean terminals; outside Korea (Japan, Korea, Taiwan) |
| Conditions for Change | – Must meet quality specifications – At the time of notice, must not be affected by force majeure (nor expected to be affected) – Must pass Ship-Shore Compatibility Study (SSCS) between alternative vessel and discharge terminal – Must meet cargo size range | – Must pass SSCS between vessel and alternative discharge terminal – At the time of notice, must not be affected by force majeure (nor expected to be affected) – No significant impact on the LNG vessel’s future schedule – Additional costs arising from diversion to be borne by the buyer (e.g., excess port charges, reasonable/verified costs, etc.) |
Conditions for Changing to an Alternative Discharge Port (ADP)
- The buyer can designate an alternative receiving terminal or discharge port in Japan, Korea, Taiwan, or mainland China at least 30 days before the start of the SDW(Scheduled Delivery Window). Upon request, the seller shall make reasonable efforts to accommodate the change.
Conditions for the Alternative Receiving Terminal
- Must be compatible with the LNG vessel and unaffected (or not expected to be affected) by force majeure.
- Must be able to accommodate the contractual vessel size and not disrupt the seller’s existing shipping schedule.
- Must be commercially operational and not under force majeure at the time of nomination.
- Must pass the Ship-Shore Compatibility Study (SSCS) and be able to receive the LNG vessel.
- Buyer must reimburse the seller for all reasonable and verifiable additional costs due to diversion.
| Category | Changing of Supply Source (Changing Loading Port) | Diversion (Changing Discharge Port) |
| Notice Period | XX days (30 days) before Scheduled Delivery Window (SDW) or Scheduled Arrival Window (SAW) | XX days (30 days) before Scheduled Delivery Window (SDW) or Scheduled Arrival Window (SAW) |
| Change Authority | Seller shall have the right | Requires seller’s confirmation |
| Scope of Change | Anywhere in the world (or within seller’s portfolio) | Within Korean terminals; outside Korea (Japan, Korea, Taiwan) |
| Conditions for Change | – Must meet quality specifications – At the time of notice, must not be affected by force majeure (nor expected to be affected) – Must pass Ship-Shore Compatibility Study (SSCS) between alternative vessel and discharge terminal – Must meet cargo size range | – Must pass SSCS between vessel and alternative discharge terminal – At the time of notice, must not be affected by force majeure (nor expected to be affected) – No significant impact on the LNG vessel’s future schedule – Additional costs arising from diversion to be borne by the buyer (e.g., excess port charges, reasonable/verified costs, etc.) |
Key Observations
Negotiations vary, but sellers generally want to retain the ability to change the loading port, whereas discharge port changes (diversions) are typically subject to seller cooperation. If sellers cannot change loading ports, portfolio players often won’t sign contracts.
Notice periods are generally the same for both, helping to minimize risks such as time loss.
The scope of change also differs:
- Sellers may change loading ports within their portfolio (subject to sanctions compliance).
- Buyers usually discharge at fixed countries and can change only among major East Asian markets.
Common prerequisite: no force majeure impact.
- For loading port changes, meeting the buyer’s quality requirements is key (since discharge port is fixed).
- For discharge port changes, ensuring vessel compatibility and schedule alignment is key (since vessel is fixed).
Additional costs from discharge port changes are naturally borne by the buyer.
Changing the Vessel
This is also an important and natural change along with port changes.
- Vessel Substitution Notice
- Seller may designate an alternative vessel at least 30 days before the contractual delivery period and must notify the buyer in writing.
- Exceptionally, if the seller requests to notify after the 30-day mark, the buyer should make reasonable efforts to agree.
- Conditions for Alternative Vessel
- Must pass SSCS with the designated discharge port or terminal.
- Must not be affected by force majeure at the time of nomination.
- Must meet the LNG Ship Size Range.
- Substitution must not cause the contractual nominal quantity limits to be exceeded.
| Category | Changing of Supply Source (Changing Loading Port) | Alternative Ship | Diversion (Changing Discharge Port) |
| Notice Period | XX days (30 days) before Scheduled Delivery Window (SDW) or Scheduled Arrival Window (SAW) | XX days (30 days) before Scheduled Delivery Window (SDW) or Scheduled Arrival Window (SAW) | XX days (30 days) before Scheduled Delivery Window (SDW) or Scheduled Arrival Window (SAW) |
| Change Authority | Seller shall have the right | Seller shall have the right | Requires seller’s confirmation |
| Scope of Change | Anywhere in the world (or within seller’s portfolio) | Within LNG ship size range | Within Korean terminals; outside Korea (Japan, Korea, Taiwan) |
| Change Conditions | Must meet quality specifications |
Characteristics
Notice periods and change effectiveness for loading ports and vessels are similar, meaning changing one often results in changing the other.
Reverse cases can happen: a vessel issue could force a loading port change if no alternative ship can be sourced.
In a highly liquid LNG market with oversupply, a seller might switch to a cheaper spot-chartered ship for profit, but in today’s market, this is rare—unless charter rates crash for a sustained period.
From an operational standpoint, DES sellers prefer SPA terms with flexibility and a wide range of options. Vessel changes are linked to SDW and cargo size range; as long as those aren’t violated, sellers want the freedom to change vessels.
Finally, note this is from a DES buyer’s perspective. Thinking from the seller’s viewpoint may make these preferences clearer.
End.