A European utility was concerned that it was being systemically overcharged under a complex long-term gas and LNG supply contract under which the price was derived from a portfolio of prices linked to a defined set of the seller’s contracts. Due to confidentiality constraints surrounding those primary contracts, the buyer’s oversight was limited to audit rights over the seller’s price calculations. The dispute centred on whether the seller’s approach to attributing costs and reflecting the underlying terms of its primary contracts was consistent with the contractual pricing mechanism and accurately represented the economic reality of those arrangements.
Gas Strategies’ independent energy experts were appointed under terms that allowed the buyer to appoint an LNG independent expert to conduct an audit of the prices charged. Drawing on extensive commercial and operational experience, we provided extensive assessment and remodelling of the charges and provided an expert report to demonstrate that the seller’s methodology for allocating costs from the primary contracts lacked consistency with established industry practice and failed to appropriately reflect the terms and economics of the underlying primary contracts.
Engaged in independent LNG expert review
Our analysis provided a robust framework for reconciling contract pricing outcomes with the actual delivery and cost dynamics of the primary contracts, highlighting discrepancies that supported the buyer’s concerns. Building on this foundation, Gas Strategies was engaged as independent LNG experts in the ensuing arbitration, where our evidence was instrumental in reinforcing the client’s position that pricing should be grounded in a transparent and economically coherent interpretation of the contractual mechanism. By establishing the client’s case in recognised commercial principles and market-informed practice, our work was critical to challenging the seller’s approach to contract price calculation.