CASE STUDIES / PRICING · OCT 2025
How volume flexibility affects an LNG contract’s price.
The study models an LNG supply contract inside a shipper’s existing portfolio and compares volume ranges and price adders.
Up to $40M
MODELLED SPA VALUE OF A $0.50/MMBTU PRICE DIFFERENCE
Value the terms inside the buyer’s portfolio.
01 · CONTRACT VALUATION
The same volume clause can have different value for different buyers. This example calculates how the proposed supply fits an existing fleet and sales programme before comparing price adders.
Model the shipper and the proposed contract.
02 · PORTFOLIO
The simulated shipper has five vessels, 44 long cargoes and 62 short cargoes. The new Calcasieu Pass contract has 24 cargo dates and four-day loading windows.
THE SIMULATED SHIPPER · 2025-2027
- An energy company considering additional LNG supply
- Fleet: three owned vessels (174K, 174K, 150K) plus two TC-in (174K, 155K)
- 44 supply cargoes: Nigeria LNG 14, Sabine Pass 12, Qatargas 9, Arzew 6, Coral South 3
- 62 cargo sales across Boryeong, Gate, Bizkaia, Futtsu, Wilhelmshaven, Adriatic, Dahej
THE CONTRACT ON THE TABLE
- New Calcasieu Pass FOB purchases: 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 2025 TO 2027 · SIMULATED PARTIES ON PUBLIC TERMINAL DATA
Test volume and price together.
03 · PRICE SIMULATIONS
Five volume ranges, four price adders and 200 price sets produce 4,000 scenario evaluations. There are 20 combinations of contract terms. The purchase formula is 115% HH plus the selected adder.
Compare the operating effect.
04 · PRICE EFFECT
The widest range, 2.7 to 3.8 million MMBtu, produces the highest value in the comparison. It lets the model choose volumes that fit the vessel and delivery plan.
Translate the result into a price comparison.
05 · CONTRACT VALUE
At an assumed shipper profit of $7.50/MMBtu, the illustrative market line implies a $4.40 adder. The fleet-based valuation supports $4.90. The difference is $0.50/MMBtu under these assumptions.
A $1/MMBTU EDGE AT A TYPICAL 1 MTPA SPA IS ROUGHLY $45M OF EXTRA ANNUAL PROFIT
06 · RESULT
A $0.50/MMBtu pricing difference is worth up to $40M over the modelled SPA.
Both parties are simulated. The market-expectation line is illustrative, while the fitted value lines come from the simulation. The $40M is modelled contract value, not realised negotiation revenue.
What this comparison shows.
07 · TAKEAWAYS
Model the shipper and the proposed contract
The simulated shipper has five vessels, 44 supply cargoes and 62 cargo sales. The new Calcasieu Pass contract has 24 cargo dates and four-day loading windows.
Translate the result into a price comparison
At an assumed shipper profit of $7.50/MMBtu, the illustrative market line implies a $4.40 adder. The fleet-based valuation supports $4.90. The difference is $0.50/MMBtu under these assumptions.
Scope of the result
Both parties are simulated. The market-expectation line is illustrative, while the fitted value lines come from the simulation. The $40M is modelled contract value, not realised negotiation revenue.
How the study was calculated.
08 · CALCULATION
Set up the comparison
The same volume clause can have different value for different buyers. This example calculates how the proposed supply fits an existing fleet and sales programme before comparing price adders.
Calculate the alternatives
Five volume ranges, four price adders and 200 price sets produce 4,000 scenario evaluations. There are 20 combinations of contract terms. The purchase formula is 115% HH plus the selected adder.
Review the result
A $0.50/MMBtu pricing difference is worth up to $40M over the modelled SPA.
Modelled results depend on the contracts, prices and operating assumptions used.