We had an intimate knowledge of this client’s operations. Back in the 2000s, we had taken the original project to FID and consulted with them at key moments on their journey to date. With the original long-term contract offtake arrangements due to expire in the next few years, they wanted to explore the opportunities and implications of a more flexible future; one that also reflected their recent change in ownership. Our job was to design an LNG marketing model that would be fair to all shareholders and practical to implement, as well as accelerating the capabilities that the new model would demand of the team.
An independent perspective
As seasoned practitioners, we brought an intimate understanding of the realities of global LNG trading as well as an independent perspective to assessing the viability, commercial risks and operational implications of this transition. Our first sprint started with a full diagnostic of current contracts and governance, pinpointing risks and operational pain points or ‘growing pains’ the organisation faced in its move to equity LNG marketing. We shaped that new model around clear, agreed commercial principles and mechanisms to manage risk: a plan shareholders and leadership could get behind and deliver.
Stress-testing the plan
Any model is only as good as its performance in the market. To derisk our detailed design, give our client confidence in its effectiveness and their teams experience in working with it, our second sprint stress-tested the model.
The new business model would introduce complexity into the operation, increasing the logistical challenges: from cargo allocation to sequencing and how to minimise the (costly) risk of the plant shutting down because storage is full. So we built a detailed off-take and scheduling model and ran it against the sometime messy reality of LNG trading: shortfalls; failure-to-take; force majeure. By using data from the plant’s performance, we calibrated realistic processes for annual contract quantities and annual delivery programmes. The result is a model that’s robust, sellable to shareholders and ready to execute, and a team with the capabilities to do so.