How do you navigate LNG procurement as a first-time buyer?

A leading player in the Asia Pacific refining industry was procuring LNG for the first time. The company lacked a deep understanding of LNG's complex fundamentals and didn't have the necessary resources to navigate the market.

The management team needed expert guidance and advice at every stage: from initial market analysis to negotiating the final contract.  

Throughout the project, we developed a trusted relationship and worked closely to achieve the best result.

1. Assessing the market: The first step was to map out the market fundamentals. We reviewed supply, demand and pricing data and advised our client on the implications. In addition, our proprietary domestic price forecasting model allowed us to compare various options against the costs of importing LNG directly. This helped the client to choose the most cost-effective option.
2. Collaborating in the procurement phase: Together, we developed a customised LNG procurement strategy to achieve the best results. Various tools were created to guide the team, including a supplier screening tool. An economic model was designed to help compare bid parameters such as price, volume and destination flexibility. We also hosted several workshops to empower the team with the knowledge to conduct successful future LNG contract negotiations.
3. Navigating the details during tender and contract negotiation: Our support extended to presenting our client’s case to potential suppliers and developing the tender and LNG contract documents. We also helped our client to negotiate with potential suppliers.

The client was able to negotiate a contract price that was lower than market levels at the time, with estimated savings of more than $150 million over the contract life. The management team was also equipped with the knowledge to approach future LNG contract negotiations with confidence .