Screen-print style poster of two hands negotiating over an LNG contract at a terminal

CASE STUDIES / PRICING · OCT 2​025

Fleet modelling is worth $40M in negotiation.

Market prices rarely match a contract’s true value. Modelling a shipper’s fleet across 4,000 simulated Calcasieu Pass contracts shows how either side can claim the operational value the market cannot see.

$40M

WHAT A $0.50/MMBTU INFORMATION EDGE IS WORTH OVER A SINGLE SPA

View as slides (PDF) →

The pie both sides split.

01 · THE FRAME

In an SPA the pie is the TTF-HH spread, divided into liquefier revenue, shipper profit and shipping cost. Classic pricing strategies only slide the split up and down the market line. A contract that fits the fleet cuts the cost slice itself, moving the deal above the line: more pie for both sides, claimed by whoever quantifies it first.

0011223344556677LIQUEFIER REVENUE · $/MMBTUSHIPPER PROFIT · $/MMBTUZERO SHIPPING · UPPER BOUNDMARKET EXPECTATION · SHIPPING $2+$1+$1A FLEET-EFFICIENT CONTRACTEVERY CONTRACT IS A DOT · THE PIE: TTF - HH = $8
THE VALUE-PER-MMBTU FRAMEWORK · PRICE FORMULA 115% HH + ADDER · MARKET LINE ILLUSTRATIVE, AS IN THE SOURCE STUDY

A simulated liquefier meets a simulated shipper.

02 · THE SETUP

The liquefier sits at the Calcasieu Pass in Louisiana, home to two operational terminals and a development pipeline of well over 100 mtpa: many new SPAs will be negotiated here. The shipper is a mid-market energy major whose existing book is fully modelled in X-LNG.

THE SIMULATED SHIPPER · 2025-2027

  • A mid-market energy major seeking long positions
  • Fleet: three owned vessels (174K, 174K, 150K) plus two TC-in (174K, 155K)
  • 44 long cargoes: Nigeria LNG 14, Sabine Pass 12, Qatargas 9, Arzew 6, Coral South 3
  • 62 short cargoes across Boryeong, Gate, Bizkaia, Futtsu, Wilhelmshaven, Adriatic, Dahej

THE CONTRACT ON THE TABLE

  • New Calcasieu Pass FOB Long: 24 cargo dates, 4-day loading windows
  • Price 115% HH plus an adder: the adder is the negotiation
  • Five volume ranges from tight (3.2 to 3.3M MMBtu) to wide (2.7 to 3.8M)
  • Cancellation fee $1M per cargo

SHIPPER PRIOR P&L $188,845,264 AT FORWARD CURVES 2​025 TO 2​027 · SIMULATED PARTIES ON PUBLIC TERMINAL DATA

Four thousand contracts, five value lines.

03 · THE SIMULATION

Five volume ranges times four adders times 200 Monte Carlo price sets: 4,000 simulated contracts, run November 2025 to September 2027 and regressed into one value line per range. Greater volume flexibility is usually more valuable; the wide 2.7 to 3.8M MMBtu range sits consistently on top.

567891011$6$7$8$9$10LIQUEFIER REVENUE · $/MMBTU · HIGHER ADDER →SHIPPER PROFIT · $/MMBTUMARKET: ADDER $4.40FLEET MODEL: $4.90SAME PROFIT · $0.50 EDGECONTRACT VALUE PREDICTED BY ADDER · SHIPPER PROFIT HELD AT $7.50SMALL · 3.2-3.3MMEDIUM · 3.0-3.5MWIDE · 2.7-3.8MLOWER · 2.7-3.3MUPPER · 3.2-3.8MMARKET EXPECTATIONMMBTU VOLUME RANGES
TRENDLINES EXACT FROM THE ENGINE REGRESSIONS · MARKET-EXPECTATION LINE ILLUSTRATIVE · 200 MC PRICE SETS PER COMBINATION

A dollar of adder costs more than a dollar.

04 · THE STEEPNESS

In every volume range the adder effect is steeper than minus one: raising the adder takes the dollar directly and occasionally forces the shipper to cancel cargoes at the $1M fee, losing revenue on their short contracts on top. The tighter the volume range, the steeper the penalty.

0-0.5-1-1.5SMALL · 3.2-3.3M-1.39UPPER · 3.2-3.8M-1.36MEDIUM · 3.0-3.5M-1.29LOWER · 2.7-3.3M-1.22WIDE · 2.7-3.8M-1.07-1.00 · A PURE DOLLAR-FOR-DOLLAR TRANSFERSHIPPER P&L PER +$1 ADDER · $/MMBTU · ALL STEEPER THAN -1
ADDER EFFECTS FROM THE ENGINE REGRESSIONS · SHIPPER P&L RESPONSE PER +$1 OF ADDER, $/MMBTU

The negotiation, worked through.

05 · THE PAYOFF

The shipper proposes the wide range and current market conditions put shipper profit at $7.50/MMBtu. The market-expectation line implies an adder of $4.40, and an uninformed liquefier would settle there. Fleet modelling shows the contract is efficient enough to support $4.90 at the same shipper profit. That half dollar is free money for whoever saw it first; aware of it, both sides can negotiate their share.

A $1/MMBTU EDGE AT A TYPICAL 1 MTPA SPA IS ROUGHLY $45M OF EXTRA ANNUAL PROFIT

INFORMATION EDGE · WORKED EXAMPLE

Market-fair adder at $7.50/MMBtu shipper profit$4.40
The fleet-efficient contract supports$4.90
Edge per MMBtu$0.50
Free value over the SPA$40M

06 · THE VERDICT

Whoever models the fleet knows the true value of the contract:
and captures the share the market price leaves on the table.

The same technique prices any contract element: cancellation flex, delivery windows, nomination conditions. The market line is where negotiations start; the fleet model is where they are won.

What the 4,000 contracts teach.

07 · TAKEAWAYS

✓

Wide volume ranges carry real value

The 2.7 to 3.8M MMBtu range is consistently the most valuable to ship and has the flattest adder effect at -1.07: flexibility that fits the fleet cuts shipping cost directly.

✓

The information edge lives in the adder

The market line prices this contract at $4.40; the fleet model shows it supports $4.90 at the same shipper profit. That $0.50/MMBtu is up to $40M over the SPA, and a $1 edge at a typical 1 mtpa is about $45M a year, for whoever quantifies it first.

!

Every adder dollar costs the shipper more than a dollar

Adder effects run from -1.07 to -1.39: the extra expense occasionally forces cancellations at the $1M fee and missed revenue on the shorts. Both sides are simulated on public terminal data; real books will differ.

Modelled with X-LNG.

08 · THE TOOL

1

Your world goes in

Contracts, vessels, charter rates, prices, spot assumptions and constraints. The full book, not a slice.

2

One optimal plan comes out

Feasible, P&L-maximising and constraint-compliant, re-solved for every scenario in minutes.

3

Every number checks out

Each result can be recalculated by hand. Transparency your risk committee can audit.

CLOUD-BASED, ANY PORTFOLIO SIZE · BUILT AND ADVANCED DAILY BY ~25 MATHEMATICIANS, PHYSICISTS AND COMPUTER SCIENTISTS