Over the last six weeks, there have been an increasing number of declarations of force majeure in the global LNG market reported, both under (i) single source/single train SPAs with Middle Eastern sellers, such as QatarEnergy, following missile attacks at the Ras Laffan facilities; (ii) portfolio agreements from portfolio LNG sellers with offtake capacity or supply arrangements in the Middle East; and (iii) short-term or trading transactions.
In our previous articles, we highlighted the importance of carefully scrutinising the contents of a force majeure notice to ascertain its validity and compliance with the relevant agreement and verifiable facts. In this article, we delve deeper into the two questions provoking much debate in the market right now:
What is the scope and extent of the duty to mitigate?
What are legal and commercial options for traders in managing the supply shortfalls on the trading desk?
