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(1) | Seller's Affiliate, Sabine Pass LNG, L.P. (“SPLNG”), owns and operates a liquefied natural gas (“LNG”) receiving and regasification terminal situated on the Pass Channel of the Sabine Neches Waterway in southwest Cameron Parish, Louisiana; |
(2) | Seller is developing and intends to construct, own and operate liquefaction facilities of up to four (4) modules, each capable of producing approximately four decimal two (4.2) million tonnes per annum of LNG production capacity, which will be operated simultaneously with a portion of the currently existing LNG import capacity at the Sabine Pass Facility, making the Sabine Pass Facility a bi-directional LNG import and export terminal; |
(3) | SPLNG provides berthing, storage, regasification, and other services at the Sabine Pass Facility to Cheniere Energy Investments, LLC (“CEI”), an Affiliate of Seller; |
(4) | Buyer desires to purchase LNG at the Sabine Pass Facility and transport such LNG to one or more Discharge Terminals; and |
(5) | Seller and Buyer desire to execute a definitive agreement setting out the Parties' respective rights and obligations in relation to the sale and purchase of LNG. |
1. | Definitions and Interpretation |
1.1 | Definitions |
AAA: | as defined in Section 21.1.2; |
Acceptable Credit Rating: | a credit rating that is at least Baa 1 by Moody's Investors Service Ltd. or BBB+ by Standard & Poor's Financial Services LLC or Fitch Ratings Ltd. or a comparable rating from an internationally recognized credit rating agency; |
ACQ: | as defined in Section 5.1.1; |
Actual Laytime: | as defined in Section 7.12.2; |
or AACQ: | as defined in Section 5.2; |
Adverse Weather Conditions: | weather or sea conditions actually experienced at or near the Sabine Pass Facility that are sufficiently severe: (i) to prevent an LNG Tanker from proceeding to berth, or loading or departing from berth, in accordance with one or more of the following: (a) regulations published by a Governmental Authority; (b) an Approval; or (c) an order of a Pilot; (ii) to cause an actual determination by the master of an LNG Tanker that it is unsafe for such LNG Tanker to berth, load, or depart from berth; or (iii) to prevent or severely limit the production capability of the Sabine Pass Facility; |
Affiliate: | with respect to any Person, any other Person which directly or indirectly through one or more intermediaries controls, is controlled by or is under common control with such Person; for purposes of this definition, “control” (including, with correlative meanings, the terms “controlled by” and “under common control with”) means the direct or indirect ownership of fifty percent (50%) or more of the voting rights in a Person or the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities or otherwise; |
Agreement: | this agreement, including the Schedules and Exhibits hereto, as the same may be amended, modified or replaced from time to time; |
Allotted Laytime: | as defined in Section 7.12.1; |
Annual Delivery Program or ADP: | as defined in Section 8.2.3; |
Applicable Laws: | in relation to matters covered by this Agreement, all applicable laws, statutes, rules, regulations, ordinances, codes, standards and rules of common law, and judgments, decisions, interpretations, orders, |
Approvals: | any and all permits (including work permits), franchises, authorizations, approvals, grants, licenses, visas, waivers, exemptions, consents, permissions, registrations, decrees, privileges, variances, validations, confirmations or orders granted by or, where applicable, filed with any Governmental Authority, including the Export Authorizations; |
Bankruptcy Event: | with respect to any Person: (i) such Person's suspension of payment of, or request to any court for a moratorium on payment of, all or a substantial part of such Person's debts, (ii) such Person's making of a general assignment or any composition with or for the benefit of its creditors except to the extent otherwise permitted by Section 22, (iii) any filing, or consent by answer by such Person to the filing against it, of a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, or (iv) any order under the bankruptcy or insolvency laws of any jurisdiction: (a) entered for the winding up, bankruptcy, liquidation, dissolution, custodianship or administration with respect to such Person or any substantial part of such Person's property; (b) constituting an order for relief with respect to such Person; (c) approving a petition for relief or reorganization or any other petition in bankruptcy or insolvency law with respect to such Person; or (d) approving any petition filed in bankruptcy or insolvency law against such Person; |
Bridging Period: | as defined in Section 4.5.1; |
Bridging Start Date: | as defined in Section 4.5.1; |
Bridging Volume: | as defined in Section 4.5.2; |
Btu: | the amount of heat equal to one thousand fifty-five decimal zero five six (1,055.056) Joules; |
Business Day: | any Day (other than Saturdays, Sundays and national holidays in the United States of America) on which commercial banks are normally open to conduct business in the United States of America; |
Buyer: | as defined in the Preamble; |
Buyer Taxes: | as defined in Section 11.3; |
Cargo DoP Payment: | as defined in Section 5.6.2; |
Cargo DoP Quantity: | as defined in Section 5.6.2; |
Cargo Shortfall Quantity: | as defined in Section 5.5.2; |
CEI: | as defined in the Recitals; |
Claim: | all claims, demands, legal proceedings, or actions that may exist, arise, or be threatened currently or in the future at any time following the Effective Date, whether or not of a type contemplated by any Party, and whether based on federal, state, local, statutory or common law or any other Applicable Law; |
Composite ADP: | as defined in Section 8.2.4; |
Conditions Precedent: | as defined in Section 2.2.1; |
Confidential Information: | as defined in Section 19.1; |
Connecting Pipeline: | each of the Creole Trail Pipeline, the Kinder Morgan Louisiana Pipeline, or such other pipeline as may be interconnected to the Sabine Pass Facility, as applicable; |
Contract Year: | as defined in Section 4.4; |
Cover Damages: | as defined in Section 5.5.3(a); |
CP Deadline: | as defined in Section 2.2.3; |
CP Fulfillment Date: | as defined in Section 2.2.2; |
Creole Trail Pipeline: | that certain Gas pipeline, owned and operated by the Cheniere Creole Trail Pipeline, L.P., which interconnects with the Sabine Pass Facility in |
CSP: | as defined in Section 9.1.1; |
Cubic Meter: | in relation to Gas, the quantity of dry ideal Gas, at a temperature of fifteen (15) degrees Celsius and a pressure of one hundred one decimal three two five (101.325) kilopascals absolute contained in a volume of one (1) cubic meter; |
Date of First Commercial Delivery: | as defined in Section 4.2; |
Day: | a period of twenty-four (24) consecutive hours starting at 00:00 hours local time in Cameron Parish, Louisiana; |
Delivery Point: | as defined in Section 6.1; |
Delivery Window: | a twenty-four (24) hour period starting at 6:00 a.m. Central Time on a specified Day and ending twenty-four (24) consecutive hours thereafter that is allocated to Buyer under the ADP or Ninety Day Schedule, as applicable; |
Demurrage Event: | as defined in Section 7.12.3; |
Designated Train: | the fourth Train that is commercially operable, as determined in accordance with Section 4.3; |
Direct Agreement: | as defined in Section 22.4.2; |
Discharge Terminal: | with respect to each cargo of LNG taken or scheduled to be taken by Buyer pursuant to this Agreement, the facilities intended by Buyer to be utilized for the unloading, reception, discharge, storage, treatment (if necessary), and regasification of the LNG and the processing and send-out of Gas or regasified LNG, and other relevant infrastructure, including marine facilities (such as breakwaters and tugs) for the safe passage to berth of LNG Tankers, terminal facilities |
Dispute: | any dispute or difference of whatsoever nature arising under, out of, in connection with or in relation (in any manner whatsoever) to this Agreement or the subject matter of this Agreement, including (a) any dispute or difference concerning the initial or continuing existence of this Agreement or any provision of it, or as to whether this Agreement or any provision of it is invalid, illegal or unenforceable (whether initially or otherwise); or (b) any dispute or claim which is ancillary or connected, in each case in any manner whatsoever, to the foregoing; |
Effective Date: | as defined in the Preamble; |
ETA: | with respect to an LNG Tanker, the estimated time of arrival of such LNG Tanker at the PBS; |
Expert: | a Person agreed upon or appointed in accordance with Section 21.2.1; |
Export Authorizations: | the FTA Export Authorization and the Non-FTA Export Authorization, either individually or together (as the context requires); |
FID: | as defined in Section 2.2.1(c); |
Final Contract Year: | as defined in Section 4.4(b); |
Final Window Period: | as defined in Section 4.2.4; |
First Contract Year: | as defined in Section 4.4(a); |
First Window Period: | as defined in Section 4.2.1; |
Force Majeure: | as defined in Section 14.1; |
Foundation Customer: | (a) Buyer; and (b) any other customer of Seller, other than an Affiliate of Seller, that enters into an LNG purchase agreement for the purchase and export of no less than zero decimal seven (0.7) million metric tonnes per annum of LNG from the Sabine Pass Facility, with a minimum term of twenty (20) years and an effective date on or prior to the FID for such |
Foundation Customer Priority: | as defined in Section 14.7; |
FTA Export Authorization: | that certain order number 2833 of the Office of Fossil Energy of the U.S. Department of Energy, dated September 7th, 2010, granting to Seller the long-term, multi-contract authorization to export up to the equivalent of approximately sixteen (16) million metric tonnes per annum of LNG by vessel from the Sabine Pass Facility for a thirty (30) year term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time; |
Gas: | any hydrocarbon or mixture of hydrocarbons consisting predominantly of methane that is in a gaseous state; |
Governmental Authority: | any national, regional, state, or local government, or any subdivision, agency, commission or authority thereof (including any maritime authorities, port authority or any quasi-governmental agency), having jurisdiction over a Party (or any Affiliate or direct or indirect owner thereof), a Connecting Pipeline, Gas in a Connecting Pipeline or the Sabine Pass Facility, the Sabine Pass Facility, LNG in the Sabine Pass Facility, an LNG Tanker, a Transporter, the last disembarkation port of an LNG Tanker, a Discharge Terminal, or any Gas pipeline which interconnects with a Connecting Pipeline and which transports Gas to or from a Connecting Pipeline, as the case may be, and acting within its legal authority; |
Gross Heating Value: | the quantity of heat expressed in Btu produced by the complete combustion in air of one (1) cubic foot of anhydrous gas, at a temperature of sixty (60) degrees Fahrenheit and at an absolute pressure of fourteen decimal six nine six (14.696) pounds per square inch, with the air at the same temperature and pressure as the gas, after cooling the products of the combustion to the initial temperature of the gas and air, and after condensation of the water formed by combustion; |
Guarantor: | any Person approved by Seller with an Acceptable Credit Rating; |
Guaranty: | an irrevocable payment guaranty, substantially in the form attached as Exhibit C hereto, which is executed by a Guarantor in favor of Seller, and delivered to Seller, to the extent required pursuant to Section 15.3; |
HH: | the final settlement price (in USD per MMBtu) for the New York Mercantile Exchange's Henry Hub natural gas futures contract for the Month in which the relevant cargo's Delivery Window is scheduled to begin; |
ICC: | as defined in Section 21.2.1; |
Indemnified Party: | as defined in Section 15.4(a); |
Indemnifying Party: | as defined in Section 15.4(a); |
Inspection Maintenance Quantity: | as defined in Section 5.4.2; |
International LNG Terminal Standards: | to the extent not inconsistent with the express requirements of this Agreement, the international standards and practices applicable to the design, construction, equipment, operation or maintenance of LNG receiving and regasification terminals or LNG liquefaction terminals, as the case may be, established by the following (such standards to apply in the following order of priority): (i) a Governmental Authority having jurisdiction over the Sabine Pass Facility, Seller, or Seller's operator; (ii) the Society of International Gas Tanker and Terminal Operators (to the extent applicable); and (iii) any other internationally recognized non-governmental agency or organization with whose standards and practices it is customary for Reasonable and Prudent Operators of LNG receiving and regasification terminals or LNG liquefaction terminals, as the case may be, to comply, provided, however, that in the event of a conflict between any of the priorities noted above, the priority with the lowest roman numeral noted above shall prevail; |
International LNG Vessel Standards: | the standards and practices from time to time in force applicable to the ownership, design, equipment, operation or maintenance of LNG vessels established by: (i) the International Maritime Organization; (ii) the Oil Companies International Marine Forum |
International Standards: | (i) with respect to Buyer, the International LNG Vessel Standards; (ii) with respect to Seller, the International LNG Terminal Standards; |
In-Transit Final Notice: | as defined in Section 7.9.3(d); |
In-Transit First Notice: | as defined in Section 7.9.2; |
In-Transit Second Notice: | as defined in Section 7.9.3(a); |
In-Transit Third Notice: | as defined in Section 7.9.3(c); |
Kinder Morgan Louisiana Pipeline: | a high pressure gas pipeline owned and operated by Kinder Morgan Louisiana Pipeline LLC, a Delaware limited liability company, which extends approximately one hundred and thirty-seven (137) miles east and north from, and interconnects with, the Sabine Pass Facility; |
Lender: | any Person, other than a shareholder of either Party, duly authorized in its principal place of business to lend monies, to finance or to provide financial support in any form in respect of the Sabine Pass Facility, including any export credit agency, funding agency, bondholder, insurance agency or similar institution in relation to the provision of finance or financial support; |
Lenders' Agent: | as defined in Section 22.4.1; |
LIBOR: | on or from any Day, the percentage rate per annum published two (2) London Banking Days before that Day (or, if that Day is not a London Banking Day, |
LNG: | Gas in a liquid state at or below its point of boiling and at or near atmospheric pressure; |
LNG Tanker(s): | an ocean-going vessel suitable for transporting LNG which complies with the requirements of this Agreement and which Buyer uses, or intends to use, in connection with this Agreement; |
Loading Port: | the port where the Sabine Pass Facility is located, in the vicinity of Cameron Parish, Louisiana, or the port at an alternate supply source pursuant to Section 3.1.2; |
London Banking Day: | any Day (other than Saturdays, Sundays and national holidays in London, England) on which banks are normally open to conduct business in London, England; |
Loss: | any and all losses, liabilities, damages, costs, judgments, settlements and expenses (whether or not resulting from Claims by Third Parties), including interest and penalties with respect thereto and reasonable attorneys' and accountants' fees and expenses; |
Major Scheduled Maintenance Quantity: | as defined in Section 5.4.1; |
Measurement Dispute: | as defined in Section 21.2.1; |
Mitigation Sale: | as defined in Section 5.5.3(b); |
MMBtu: | one million (1,000,000) Btus; |
Month: | each period of time which starts at 00:00 local time in Cameron Parish, Louisiana on the first Day of each calendar month and ends at 24:00 local time in Cameron Parish, Louisiana on the last Day of the same calendar month; |
Ninety Day Schedule: | as defined in Section 8.4; |
Non-FTA Export Authorization: | that certain order number 2961 of the Office of Fossil Energy of the U.S. Department of Energy, dated May 20th, 2011, granting to Seller the long-term, multi-contract authorization to export up to the equivalent of approximately sixteen (16) million metric tonnes per annum of LNG by vessel from the Sabine Pass Facility for a twenty (20) year term, as the same may be supplemented, amended, modified, changed, superseded or replaced from time to time; |
Notice of Readiness or NOR: | the notice of readiness issued by an LNG Tanker in accordance with Section 7.10.1; |
Off-Spec LNG: | as defined in Section 12.3.1; |
Operational Tolerance: | as defined in Section 5.5.3(c); |
P&I Club: | a Protection and Indemnity Club that is a member of the International Group of P&I Clubs; |
P&I Insurance: | as defined in Section 15.6(b); |
Party: | Buyer or Seller, and Parties means both Buyer and Seller; |
Payor: | as defined in Section 11.4; |
PBS: | the customary Pilot boarding station at the Loading Port where the Pilot boards the LNG Tanker, as determined by the applicable Governmental Authority or other entity with authority to regulate transit and berthing of vessels at the Loading Port; |
Person: | any individual, corporation, partnership, trust, unincorporated organization or other legal entity, including any Governmental Authority; |
Pilot: | any Person engaged by Transporter to come on board the LNG Tanker to assist the master in pilotage, mooring and unmooring of such LNG Tanker; |
Port Charges: | all charges of whatsoever nature (including rates, tolls, dues, fees, and imposts of every description) in respect of an LNG Tanker entering or leaving the Loading Port or loading LNG, including wharfage fees, in-and-out fees, line handling charges, and |
Port Liability Agreement: | an agreement for use of the port and marine facilities located at the Loading Port, to be entered into as described in Section 7.7.1, in the form attached in Exhibit B hereto as may be amended pursuant to Section 7.7.4; |
Provisional Invoice: | as defined in Section 10.1.6(a); |
Reasonable and Prudent Operator: | a Person seeking in good faith to perform its contractual obligations, and in so doing, and in the general conduct of its undertaking, exercising that degree of skill, diligence, prudence and foresight which would reasonably and ordinarily be expected from a skilled and experienced operator, complying with all applicable International Standards and practices and regulations and approvals of Governmental Authorities, engaged in the same type of undertaking under the same or similar circumstances and conditions; |
Regasification Capacity Users: | from time to time, Persons purchasing LNG terminalling services from SPLNG, regardless of the short-term or long-term duration of the underlying terminal use agreement; |
Round-Down Quantity: | as defined in Section 5.3.2; |
Round-Up Quantity: | as defined in Section 5.3.1; |
Rules: | as defined in Section 21.1.2; |
Sabine Liquefaction Facility: | the facilities that Seller is developing and intends to construct, own and operate adjacent to, or at the same location as the existing LNG receiving and regasification terminal in Cameron Parish, Louisiana owned by SPLNG, including the liquefaction trains and associated facilities, both inside and outside the |
Sabine Pass Facility: | (i) the existing LNG receiving and regasification terminal owned by SPLNG, including storage tanks, utilities, jetties, berthing and marine facilities, and all other related facilities; and (ii) the Sabine Liquefaction Facility; |
Sabine Pass Marine Operations Manual: | as defined in Section 7.8; |
SCF: | for Gas, the quantity of anhydrous Gas that occupies one (1) cubic foot of space at a temperature of sixty (60) degrees Fahrenheit and a pressure of fourteen decimal six nine six (14.696) pounds per square inch absolute; |
Scheduled Cargo Quantity: | the quantity of LNG (in MMBtus) identified in the ADP or Ninety Day Schedule to be loaded onto an LNG Tanker in a Delivery Window in accordance with Section 8; |
Second Window Period: | as defined in Section 4.2.2; |
Seller: | as defined in the Preamble; |
Seller Aggregate Liability: | as defined in Section 15.2.6(b); |
Seller Liability Cap: | as defined in Section 15.2.6(c); |
Seller Taxes: | as defined in Section 11.2; |
SI: | the International System of Units; |
Specifications: | as defined in Section 12.1; |
SPLNG: | as defined in the Recitals; |
Term: | as defined in Section 4.1.1; |
Terminating Party: | as defined in Section 20.2.1; |
Termination Events: | as defined in Section 20.1; |
Third Party: | a Person other than a Party; |
Third Party Claim: | as defined in Section 15.4(a); |
Third Window Period: | as defined in Section 4.2.3; |
Train: | an LNG production train located at the Sabine Liquefaction Facility, including those facilities included in the Sabine Pass Facility that are necessary to enable Seller to fulfill its obligations to Buyer from such LNG production train; |
Transporter: | any Person who is a registered or disponent owner of, or any Person who contracts with the same or with Buyer for the purposes of providing, operating, or chartering any of the LNG Tankers; |
USD or US$: | the lawful currency from time to time of the United States of America; |
X0: | the constant applicable on the Effective Date and equal to USD three decimal zero zero per MMBtu (US$3.00/MMBtu); and |
Xy: | the constant applicable for a given Contract Year expressed in USD per MMBtu and calculated in accordance with Section 9.1.2. |
1.2 | Interpretation |
1.2.1 | The titles, headings, and numbering in this Agreement are included for convenience only and will have no effect on the construction or interpretation of this Agreement. |
1.2.2 | References in this Agreement to Sections and Exhibits are to those of this Agreement unless otherwise indicated. References to this Agreement and to agreements and contractual instruments will be deemed to include all exhibits, schedules, appendices, annexes, and other attachments thereto and all subsequent amendments and other modifications to such instruments, to the extent such amendments and other modifications are not prohibited by the terms of this Agreement. |
1.2.3 | The word “include” or “including” will be deemed to be followed by “without limitation.” The term “will” has the same meaning as “shall,” and thus imposes an obligation. |
1.2.4 | Whenever the context so requires, the singular includes the plural and the plural includes the singular, and the gender of any pronoun includes the other gender. |
1.2.5 | Unless otherwise indicated, references to any statute, regulation or other law will be deemed to refer to such statute, regulation or other law as amended or any successor law. |
1.2.6 | All references to a Person shall include such Person's successors and permitted assigns. |
1.2.7 | Unless otherwise indicated, any reference to a time of Day shall be to Central Time in the United States of America. |
1.3 | Replacement of Rates and Indices No Longer Available |
1.3.1 | If (a) a publication that contains a rate or index used in this Agreement ceases to be published for any reason or (b) such a rate or index ceases to exist, is materially modified, or no longer is used as a liquid trading point for Gas (as applicable), so as systematically to change its economic result, or is disaggregated, displaced or abandoned, for any reason, the Parties shall promptly discuss, with the aim of jointly selecting a rate or index or rates or indices to be used in place of such rates and indices that maintains the intent and economic effect of those original rates or indices. |
1.3.2 | If the Parties fail to agree on a replacement rate or index, the Parties may submit such issue to an Expert pursuant to Section 21.2, as amended by the provisions of this Section 1.3.2. Any Expert selected shall be instructed to select the published rate or index, or a combination of published rates or indices, with adjustments as necessary or appropriate, that most nearly preserves the intent and economic result of the original rates or indices. If the Parties are not able to agree upon an Expert within ten (10) Days after the receipt of the notice of request for expert determination, either Party may elect to refer the determination of the replacement rate or index for arbitration in accordance with Section 21.1. |
1.3.3 | If any rate used in this Agreement is not published for a particular date, but the publication containing such rate continues to be published and the rate itself continues to exist, the Parties shall use the published rate in effect for the date such rate was most recently published prior to the particular date, unless otherwise provided in this Agreement. |
1.3.4 | If any index used in this Agreement is not published for a particular date, but the publication containing such index continues to be published and the index itself continues to exist, the Parties shall use the index from the geographic location closest in proximity to the unpublished index from the same publication in effect for the particular date adjusted by the difference between the same indices from the most recent publication published prior to the particular date, unless otherwise provided in this Agreement. |
1.3.5 | If an incorrect value is published for any rate or index used in this Agreement |
2. | Approvals and Conditions Precedent |
2.1 | Approvals |
2.1.1 | Seller shall obtain and maintain in force both Export Authorizations (as in effect on the Effective Date or as may be modified thereafter in a manner that does not adversely affect Buyer) at all times, except as may be excused by Force Majeure; provided, however, the Parties acknowledge that the Non-FTA Export Authorization, unless extended, will expire in accordance with its terms prior to the end of the Term, and the Parties agree that such expiration of the Non-FTA Export Authorization shall not be a violation by Seller of this Section 2.1.1. If the Non-FTA Export Authorization expires, as set forth in the preceding sentence, prior to the end of the Term, then upon expiration of the Non-FTA Export Authorization, Buyer shall have a right to terminate this Agreement pursuant to Section 20.1.14 without Seller incurring any liability with respect to such termination by Buyer. |
2.1.2 | Buyer and Seller shall use reasonable efforts to obtain and maintain in force, and shall use reasonable efforts to cause its Affiliates to obtain and maintain in force the Approvals (other than the Export Authorizations, which shall be governed by Section 2.1.1 above) which are required for the performance of this Agreement, and shall cooperate fully with each other whenever necessary for this purpose. |
2.1.3 | If the laws of the United States of America do not require maintenance of or compliance with one or both Export Authorization(s) to export LNG from the United States of America, then for so long as the laws of the United States of America do not require such maintenance or compliance, the Parties agree that this Agreement shall be read and construed to omit those provisions of this Agreement relating to such affected Export Authorization(s) and neither Party shall have any rights or obligations (including obligations to maintain such affected Export Authorization(s), rights to terminate this Agreement and claims of Force Majeure) in respect of any such Export Authorization(s). |
2.2 | Conditions Precedent |
2.2.1 | The Parties recognize and agree that this Agreement (other than the provisions of this Section 2.2 and Sections 1, 2.1, 4.1, 14.1 to 14.6, and 15 |
(a) | Seller has received all Approvals required to construct and operate the Designated Train and any new or modified existing facilities at the Sabine Pass Facility needed to enable Seller to fulfill its obligations under this Agreement (not including any Approvals which will not be issued until after construction is commenced); |
(b) | Seller has secured the necessary financing arrangements to construct and operate the Sabine Liquefaction Facility and any new or modified existing facilities related thereto in respect of the Designated Train; |
(c) | Seller has taken a positive final investment decision in respect of the Designated Train (“FID”), in its sole discretion, to construct the liquefaction facilities and to construct any other required facilities, or modify existing facilities, in relation to the addition of any liquefaction facilities in respect of the Designated Train; and |
(d) | the Approvals required for Seller to export LNG from the Designated Train are in full force and effect. |
2.2.2 | Promptly upon satisfaction of each of the Conditions Precedent, Seller shall notify Buyer of such satisfaction. Satisfaction of each Condition Precedent can be waived only by Seller upon notice to Buyer. The date that the last of the Conditions Precedent is fulfilled or waived shall be the “CP Fulfillment Date”. At Buyer's request, Seller shall meet with Buyer on a reasonably frequent basis (but not less than one meeting every three (3) Months) to advise Buyer on the progress of the satisfaction of each of the Conditions Precedent. |
2.2.3 | Seller shall endeavor in good faith to satisfy or procure the satisfaction of each Condition Precedent by June 30th, 2013 (as may be revised in accordance with Section 2.2.4, the “CP Deadline”) or as soon thereafter as is reasonably practicable. |
2.2.4 | If any Condition Precedent is not satisfied by the CP Deadline (as such CP Deadline may be revised pursuant to this Section 2.2.4), in circumstances other than where it has been waived in accordance with Section 2.2.2, Seller shall give notice to that effect to Buyer and, if requested by Buyer, shall provide an explanation of the reason for the delay in satisfaction of the Conditions Precedent and the revised date by which it is reasonably expected that all Conditions Precedent will be satisfied. If the Parties agree in writing to change the deadline for satisfaction of the Conditions Precedent to the revised date notified by Seller or another later date, such revised date shall |
2.2.5 | If any Condition Precedent has been neither satisfied nor waived by the CP Deadline (as such CP Deadline may be revised pursuant to Section 2.2.4), then at any time after such CP Deadline either Party may give to the other Party a notice of termination of this Agreement. Such notice of termination shall be effective in accordance with Section 20.2 if any Condition Precedent remains neither satisfied nor waived prior to such date. |
3. | Subject Matter |
3.1 | Sale and Purchase |
3.1.1 | Seller shall sell and make available for delivery, or compensate Buyer if not made available for delivery, LNG in cargoes at the Delivery Point, and Buyer shall take and pay for, or compensate Seller if not taken, such LNG, in the quantities and at the prices set forth in and otherwise in accordance with and subject to the provisions of this Agreement. |
3.1.2 | Seller intends to load cargoes from the Sabine Pass Facility, but, subject to the prior written consent of Buyer (such consent not to be unreasonably withheld), Seller may deliver cargoes to Buyer from any alternate source; provided, that: |
(a) | LNG from such alternate source shall, when made available by Seller to Buyer, comply with the Specifications; |
(b) | Seller has agreed to reimburse Buyer an amount equal to Buyer's reasonable estimate of the increased costs that would be incurred as a result of the delivery of LNG at such alternate source; |
(c) | the delivery of LNG at an alternate source is necessitated by operational conditions affecting the Sabine Pass Facility that have reduced the capability of the Sabine Pass Facility to produce or load LNG, despite Seller having acted as a Reasonable and Prudent Operator; |
(d) | the receipt of LNG at an alternate source will not affect the ability of LNG Tankers to perform other cargo receipts and deliveries in a timely fashion; |
(e) | the facilities at the alternate source are compatible with LNG Tankers; |
(f) | the alternate source and the voyage thereto do not present added risks or dangers to any LNG Tanker or personnel of Buyer or any Affiliate of Buyer; and |
(g) | any other condition reasonably imposed by Buyer has been satisfied by Seller to Buyer's reasonable satisfaction. |
3.2 | Facilities |
3.2.1 | During the period from the Effective Date and continuing through the Date of First Commercial Delivery, Seller shall proceed diligently to construct, test, commission, maintain and operate the Sabine Pass Facility in accordance with the standards and specifications set forth in Section 7.2.2, or cause same to occur, so as to enable Seller to fulfill its obligations to Buyer under this Agreement. |
3.2.2 | Subject to Section 2.1.1, Seller covenants that, acting as a Reasonable and Prudent Operator, it shall at all relevant times from the Date of First Commercial Delivery and continuing throughout the Term own, or have access to and use of, and maintain and operate or cause to be maintained and operated, consistent with International Standards and subject to all Applicable Laws, the Sabine Pass Facility so as to enable Seller to fulfill its obligations to Buyer under this Agreement. |
3.3 | Destination |
4. | Term |
4.1 | Term |
4.1.1 | Term. This Agreement shall enter into force and effect as set forth in Section 2.2.1 and, subject to Section 20, shall continue in force and effect until the twentieth (20th) anniversary of the Date of First Commercial Delivery, unless extended pursuant to Section 4.1.2 (the “Term”). |
4.1.2 | Extension of Term. |
(a) | On or before the seventeenth (17th) anniversary of the Date of First Commercial Delivery, Buyer may, by notice to Seller, extend the Term |
(i) | (x) the sum of the portion of the ACQ that Buyer has elected to extend, and the ACQs of all other customers purchasing LNG or liquefaction services from the Sabine Liquefaction Facility at all times during the extension period elected by Buyer is equal to or greater than one hundred eighty-two million five hundred thousand (182,500,000) MMBtu, or (y) Buyer agrees to increase its ACQ during the extension period elected by Buyer such that the sum of Buyer's ACQ and the ACQs of all other customers purchasing LNG or liquefaction services from the Sabine Liquefaction Facility during the extension period elected by Buyer is equal to or greater than one hundred eighty-two million five hundred thousand (182,500,000) MMBtu; and |
(ii) | Seller is able, by the exercise of reasonable efforts, to maintain in effect all Approvals necessary for the continued operation of the Sabine Liquefaction Facility during the extension period elected by Buyer. |
(b) | If Seller is unable to maintain in effect all such Approvals during the entire extension period elected by Buyer, Seller shall inform Buyer of the period during which it can maintain such Approvals, and Buyer may, by giving Seller notice no later than thirty (30) Days following receipt of Seller's notice pursuant to this Section 4.1.2(b), modify its election made pursuant to this Section 4.1.2 such that the extension period is coincident with the period during which Seller can maintain such Approvals. |
(c) | If the Term is extended pursuant to this Section 4.1.2, the Parties shall make such revisions to this Agreement as are necessary to give effect to such extension, including Sections 5.1.1, 5.4.1(e), and 7.16.1(a). |
4.2 | Date of First Commercial Delivery |
4.2.1 | The period that begins on the first Day of the Month that follows the date that is sixty-eight (68) Months after the CP Fulfillment Date and ends one hundred eighty (180) Days later shall be the “First Window Period”. In |
4.2.2 | Seller shall notify Buyer, at least one hundred twenty (120) Days prior to the commencement of the First Window Period of a ninety (90) Day period falling within the First Window Period (“Second Window Period”) during which the Date of First Commercial Delivery shall occur, or, in the absence of notification by Seller in accordance with this Section 4.2.2, the Second Window Period shall be deemed to be the last ninety (90) Days of the First Window Period. |
4.2.3 | Seller shall notify Buyer at least ninety (90) Days prior to the commencement of the Second Window Period of a sixty (60) Day period falling within the Second Window Period (“Third Window Period”) during which the Date of First Commercial Delivery shall occur, or, in the absence of notification by Seller in accordance with this Section 4.2.3, the Third Window Period shall be deemed to be the last sixty (60) Days of the Second Window Period. |
4.2.4 | Seller shall notify Buyer at least sixty (60) Days prior to the commencement of the Third Window Period of a thirty (30) Day period falling within the Third Window Period (“Final Window Period”) during which the Date of First Commercial Delivery shall occur, or, in the absence of notification by Seller in accordance with this Section 4.2.4, the Final Window Period shall be deemed to be the last thirty (30) Days of the Third Window Period. |
4.2.5 | Seller shall notify Buyer at least forty-five (45) Days prior to the commencement of the Final Window Period of the Day within the Final Window Period which shall be the Date of First Commercial Delivery, or, in the absence of notification by Seller in accordance with this Section 4.2.5, the Date of First Commercial Delivery shall be deemed to be the last Day of the Final Window Period. |
4.2.6 | Subject to Section 4.3, the Date of First Commercial Delivery shall be the date so notified pursuant to this Section 4.2, regardless of whether any LNG is scheduled for delivery to Buyer or whether any LNG is in fact so delivered. Seller will provide non-binding good faith estimates of the Date of First Commercial Delivery from time to time, as credible and relevant information is available. Each window period identified in this Section 4.2 may be extended, and the Date of First Commercial Delivery may be deferred on a Day-for-Day basis, in the event of Force Majeure affecting Seller. |
4.3 | Delayed Date of First Commercial Delivery |
4.3.1 | Notwithstanding Section 4.2 to the contrary, if the Designated Train has not become commercially operable by the last Day of the Final Window Period as specified in Section 4.2.4, the Date of First Commercial Delivery shall be the first Day on which the Designated Train is commercially operable, as notified by Seller. For all purposes of this Agreement, the Designated Train shall not be considered “commercially operable” unless it has been commissioned, it is capable of delivering LNG in quantities sufficient and quality necessary to permit Seller to perform its obligations hereunder, and it is constructed in compliance with Section 7.2.2. |
4.3.2 | If the Date of First Commercial Delivery does not occur within one hundred eighty (180) Days after the last Day of the Final Window Period (as such window period may have been extended pursuant to Section 4.2.6 due to Force Majeure), Buyer may elect to terminate this Agreement pursuant to Section 20.1.9 by delivering notice of such election to Seller no later than two hundred ten (210) Days after the last Day of the Final Window Period (as such window period may have been extended pursuant to Section 4.2.6 due to Force Majeure). |
4.4 | Contract Year |
(a) | the first Contract Year is the period of time beginning on the Bridging Start Date and ending on December 31st of the same calendar year (the “First Contract Year”); and |
(b) | the final Contract Year is the period of time beginning on the January 1st immediately preceding the final Day of the Term and ending on the final Day of the Term (the “Final Contract Year”). |
4.5 | Bridging Volumes |
4.5.1 | Beginning on the date that the second Train becomes commercially operable as notified by Seller to Buyer (“Bridging Start Date”), and ending on the earlier of (i) the Date of First Commercial Delivery, or (ii) one hundred and eighty (180) Days after the last Day of the Final Window Period (as such window period may have been extended pursuant to Section 4.2.6 due to Force Majeure) (the “Bridging Period”), Seller shall sell and make available for delivery, or compensate Buyer if not made available for delivery, and Buyer shall take and pay for, or compensate Seller if not taken, LNG in cargoes at the Delivery Point pursuant to the provisions of this Section 4.5. Seller shall provide to Buyer notices on a good faith basis of the Bridging |
4.5.2 | The ACQ for any Contract Year which commences during the Bridging Period shall be an amount equal to ten million four hundred thousand (10,400,000) MMBtus (the “Bridging Volume”); provided, however, if such Contract Year does not begin on January 1st, or if the Bridging Period ends prior to December 31st of such Contract Year, then the Bridging Volume for such Contract Year shall be equal to ten million four hundred thousand (10,400,000) MMBtus multiplied by the number of Days in the Bridging Period in such Contract Year, divided by three hundred sixty-five (365) Days (or in the case of a leap year, three hundred sixty-six (366) Days). Notwithstanding the foregoing, for any Contract Year during which the Date of First Commercial Delivery occurs, the ACQ for that Contract Year shall equal the Bridging Volume plus the ACQ determined pursuant to Section 5.1.1, as adjusted pursuant to Section 5.1.3. |
4.5.3 | Prior to the Date of First Commercial Delivery, Seller shall amend the ADP for the Contract Year that includes the Date of First Commercial Delivery to schedule cargoes resulting from the increase in the ACQ for such Contract Year determined pursuant to Section 4.5.2. In amending such ADP, Seller shall solicit a proposed amended ADP from Buyer similar to that specified in Section 8.1.2, and such amended ADP promulgated by Seller shall reflect the exercise by Seller of reasonable efforts to assign to Buyer Delivery Windows that are as close as reasonably practicable to the Delivery Windows proposed by Buyer. The provisions of Section 8.3 shall not apply to such ADP amendment, but shall apply with respect to any further amendment thereto. Any Bridging Volume cargo scheduled for delivery after the Date of First Commercial Delivery shall be included in such amended ADP for the applicable Contract Year. |
4.5.4 | Unless otherwise expressly stated in this Section 4.5, all other provisions contained in this Agreement shall apply mutatis mutandis to Section 4.5 during the Bridging Period. With respect to the Bridging Period, Sections 5.1, 20.1.12 and 20.1.13 shall not apply. With respect to the application of Section 5.4.2 to the Bridging Period, “Designated Train” shall be deemed therein to refer to the “second Train,” the “Date of First Commercial Delivery” shall be deemed therein to refer to the first Day of the Bridging Period, and the amount of any Inspection Maintenance Quantity reduction during the Bridging Period shall not count against the cumulative maximum amount specified in Section 5.4.2(f). With respect to the application of |
5. | Quantities |
5.1 | ACQ |
5.1.1 | The annual contract quantity (“ACQ”) for any Contract Year shall be an amount equal to one hundred eighty-two million five hundred thousand (182,500,000) MMBtu (subject to Section 5.1.3). |
5.1.2 | The ACQ for purposes of determining all obligations under this Agreement shall be the amount expressed in MMBtus. All references in this Agreement to cargoes or other quantities are solely for operational convenience. Seller shall make available the AACQ on a reasonably even and ratable basis throughout each Contract Year in full cargo lots taking into consideration maintenance periods at the Sabine Pass Facility. |
5.1.3 | If the First Contract Year does not commence on January 1st, or if the Final Contract Year does not end on December 31st, then for all purposes hereunder the ACQ will be proportionally reduced in each such Contract Year by the proportion that the number of Days in each such Contract Year bears to the total number of Days in the calendar year in which each such Contract Year occurs. |
5.2 | Adjusted Annual Contract Quantity |
5.2.1 | Round-Up Quantity for such Contract Year, determined in accordance with Section 5.3.1; and |
5.2.2 | Round-Down Quantity for the previous Contract Year, determined in accordance with Section 5.3.2, and carried forward to the current Contract Year; |
5.2.3 | Major Scheduled Maintenance Quantities or Inspection Maintenance Quantities for such Contract Year, if any, determined in accordance with Section 5.4; |
5.2.4 | Round-Up Quantity taken in the previous Contract Year, determined in accordance with Section 5.3.1, and carried forward as a deduction to the current Contract Year; and |
5.2.5 | Round-Down Quantity for the current Contract Year, determined in accordance with Section 5.3.2. |
5.3 | Round-Up/Round-Down Quantities |
5.3.1 | If, during the development of the Annual Delivery Program, it appears that the delivery during such Contract Year of the ACQ plus the quantities specified in Section 5.2.2, less the quantities specified in Sections 5.2.3 and 5.2.4 would require Seller to make available and Buyer to take a quantity of LNG that is less than a full cargo lot, then Buyer may request, pursuant to Section 8.1.2, that the AACQ be increased by a quantity of LNG sufficient to deliver the AACQ in full cargo lots, and Seller shall use reasonable efforts to accommodate such request. Any quantity included in the Annual Delivery Program pursuant to this Section 5.3.1 shall be considered a “Round-Up Quantity”. In granting requests for Round-Up Quantities, Seller shall act in a non-discriminatory manner among Foundation Customers and shall give priority to the requests of Foundation Customers over the requests of other customers. |
5.3.2 | If, during the development of the Annual Delivery Program, it appears that the delivery during such Contract Year of the ACQ plus the quantities specified in Section 5.2.2 less the quantities specified in Sections 5.2.3 and 5.2.4 would require Seller to make available and Buyer to take a quantity of LNG that is less than a full cargo lot, but Buyer does not request an increase in the AACQ, or Buyer requests an increase but Seller is unable by the exercise of reasonable efforts to accommodate such request, then the AACQ shall be reduced by an amount (the “Round-Down Quantity”) such that the resulting AACQ can be delivered in full cargo lots. |
5.4 | Major Scheduled Maintenance and Inspections |
5.4.1 | Seller shall be entitled to reduce the AACQ in order to perform major scheduled maintenance to the Sabine Liquefaction Facility (the “Major Scheduled Maintenance Quantity”) subject to the following conditions: |
(a) | Seller may only exercise its right to such reduction in a Contract Year to the extent it determines, as a Reasonable and Prudent Operator, that major scheduled maintenance is required for operational reasons; |
(b) | Seller shall exercise reasonable efforts to schedule such reduction during the Months of July through December; |
(c) | Seller shall notify Buyer of its exercise of, and the amount of, Major Scheduled Maintenance Quantity pursuant to Section 8.1.1(b); |
(d) | the Major Scheduled Maintenance Quantity reduction elected by Seller during any Contract Year may not exceed six percent (6%) of the ACQ for such Contract Year; and |
(e) | the cumulative amount of all Major Scheduled Maintenance Quantity reductions elected by Seller pursuant to this Section 5.4.1 shall not exceed thirty percent (30%) of the ACQ during the initial Term. |
5.4.2 | Seller shall be entitled to reduce the AACQ in order to perform comprehensive inspections on the Designated Train (the “Inspection Maintenance Quantity”), subject to the following conditions: |
(a) | Seller may only exercise its right to such reduction with respect to (i) the initial eighteen (18) Month period following the Date of First Commercial Delivery and (ii) the initial twelve (12) Month period following the tenth (10th) anniversary of the Date of First Commercial Delivery; |
(b) | Seller may only exercise its right to such reduction to the extent it is necessary to accommodate a reduction in LNG production from the Designated Train due to the performance of such comprehensive inspection; |
(c) | Seller shall notify Buyer of its exercise of, and the amount of, Inspection Maintenance Quantity pursuant to Section 8.1.1(b); |
(d) | the Inspection Maintenance Quantity reduction elected by Seller during any Contract Year may not exceed eight decimal three percent (8.3%) of the ACQ for such Contract Year; |
(e) | Seller shall not elect a Major Scheduled Maintenance Quantity and an Inspection Maintenance Quantity in the same Contract Year; and |
(f) | the cumulative amount of all Inspection Maintenance Quantity reductions elected by Seller pursuant to this Section 5.4.2 shall not exceed sixteen decimal six percent (16.6%) of the ACQ during the initial Term. |
5.5 | Buyer's Purchase Obligation |
5.5.1 | During any Contract Year, Buyer shall take and pay for the Scheduled Cargo Quantity with respect to each cargo included in the AACQ and scheduled in the ADP for such Contract Year, less: |
(a) | any quantities of LNG not made available by Seller for any reasons attributable to Seller (other than quantities for which Seller is excused pursuant to this Agreement from making available due to Buyer's |
(b) | any quantities of LNG not taken by Buyer for reasons of Force Majeure. |
5.5.2 | If, with respect to any cargo identified in Section 5.5.1, Buyer does not take all or part of the Scheduled Cargo Quantity of such cargo, and such failure to take is not otherwise excused pursuant to Section 5.5.1, then the amount by which the Scheduled Cargo Quantity for such cargo exceeds the quantity of LNG taken by Buyer in relation to such cargo shall be the “Cargo Shortfall Quantity”. |
5.5.3 | With respect to any Cargo Shortfall Quantity, Buyer shall pay to Seller Cover Damages, if Cover Damages are a positive amount. |
(a) | “Cover Damages” shall be equal to: (i) the CSP multiplied by the Cargo Shortfall Quantity; minus (ii) the proceeds of any Mitigation Sale, if any; minus (iii) reasonable and verifiable savings obtained by Seller (including savings related to avoided fuel Gas for LNG production, transportation and Third Party costs avoided) as a result of the Mitigation Sale as opposed to the sale to Buyer; plus (iv) reasonable, verifiable, incremental costs incurred by Seller as a result of such Mitigation Sale (including costs related to transporting, marketing, selling, and delivery of the Cargo Shortfall Quantity). For purposes of calculating Cover Damages, the CSP shall be determined as of the Month in which the applicable Delivery Window begins. |
(b) | Seller shall use reasonable efforts to mitigate its Losses resulting from Buyer's failure to take such Cargo Shortfall Quantity by reselling such Cargo Shortfall Quantity (whether as LNG, Gas, or regasified LNG) to Third Parties (each such sale a “Mitigation Sale”); except that any sale of a quantity of LNG (or Gas or regasified LNG) by Seller to any Third Party that Seller was already obligated to make at the earlier to occur of (i) Buyer's failure to take such LNG; or (ii) Buyer's notice to Seller that it will not take such LNG, is not a Mitigation Sale. |
(c) | Notwithstanding the foregoing, if the Cargo Shortfall Quantity is within the operational tolerance of two percent (2%) of the Scheduled Cargo Quantity (“Operational Tolerance”) (such Operational Tolerance to be exercised by Buyer only with respect to operational matters regarding the LNG Tanker, and without regard to Gas markets or other commercial considerations), the Cover Damages shall be zero USD (US$0.00). |
5.5.4 | Any payment that Buyer makes under this Section 5.5 shall not be treated as an indirect, incidental, consequential or exemplary loss or a loss of income or profits for purposes of Section 15.2.1. |
5.6 | Seller's Delivery Obligation |
5.6.1 | During any Contract Year, Seller shall make available to Buyer the Scheduled Cargo Quantity with respect to each cargo in the AACQ and scheduled in the ADP for such Contract Year, less: |
(a) | quantities of LNG not taken by Buyer for any reason attributable to Buyer (other than quantities for which Buyer is excused pursuant to this Agreement from taking due to Seller's breach of this Agreement), including Force Majeure; and |
(b) | quantities of LNG not made available by Seller due to Force Majeure. |
5.6.2 | Except as otherwise excused in accordance with the provisions of this Agreement, if, during any Contract Year, for any reason other than those specified in Section 5.6.1, Seller does not make available the Scheduled Cargo Quantity with respect to any cargo identified in Section 5.6.1 then the amount by which the Scheduled Cargo Quantity exceeds the quantity of LNG made available by Seller shall be the “Cargo DoP Quantity”. Seller shall make a payment to Buyer for each MMBtu of the Cargo DoP Quantity in an amount equal to: (a) the actual, documented price incurred by Buyer for the purchase of a replacement quantity of LNG or Gas (not to exceed the MMBtu equivalent of the Cargo DoP Quantity), or, in respect of any Cargo DoP Quantity for which a replacement quantity cannot be purchased, the market price of LNG at such time at the cargo's originally scheduled destination; less (b) the CSP; plus (c) any actual, reasonable, and verifiable costs (if any), incurred by Buyer due to such failure, including costs associated with transportation; plus (d) any actual, verifiable costs incurred by Buyer in respect of idling the LNG Tanker scheduled to load the Cargo DoP Quantity; less (e) actual, reasonable, and verifiable cost savings realized by Buyer due to Seller's failure to make the Scheduled Cargo Quantity available (the “Cargo DoP Payment”). For purposes of calculating the Cargo DoP Payment, CSP shall be determined as of the Month in which the applicable Delivery Window begins. |
5.6.3 | Notwithstanding the foregoing, if the Cargo DoP Quantity is within the Operational Tolerance (such Operational Tolerance to be exercised by Seller only with respect to operational matters regarding the Sabine Pass Facility, and without regard to Gas markets or other commercial considerations), the Cargo DoP Payment shall be zero USD (US$0.00). |
5.6.4 | Buyer shall use reasonable efforts to mitigate Seller's liability to make any payments pursuant to this Section 5.6. |
5.6.5 | In the event the ability of the Sabine Pass Facility to produce and deliver LNG is impaired due to an unscheduled services interruption that does not constitute Force Majeure, Seller shall comply with the Foundation Customer Priority in allocating the LNG that is available from the Sabine Pass Facility. |
6. | Delivery Point, Title and Risk |
6.1 | Delivery Point |
6.2 | Title and Risk |
7. | Transportation and Loading |
7.1 | Transportation by Buyer |
7.2 | Sabine Pass Facility |
7.2.1 | Prior to the Date of First Commercial Delivery and provided the Conditions Precedent set forth in this Agreement are satisfied or waived in accordance herewith, Seller shall cause the Sabine Liquefaction Facility to be constructed and commissioned so as to be able to provide liquefaction services and otherwise to achieve commercial operations completion for making available LNG. During the Term, Seller shall at all times cause to be provided, maintained and operated the Sabine Pass Facility in accordance with the following: (a) International Standards; (b) all terms and conditions set forth in this Agreement; and (c) to the extent not inconsistent with International Standards, such good and prudent practices as are generally followed in the LNG industry by Reasonable and Prudent Operators of similar LNG liquefaction terminals and similar receiving and regasification terminals. |
7.2.2 | The Sabine Pass Facility shall include the following: |
(a) | appropriate systems for communications with LNG Tankers; |
(b) | two berths, each capable of berthing an LNG Tanker having a displacement of no more than one hundred sixty-six thousand (166,000) tons, an overall length of no more than one thousand one hundred forty (1,140) feet, a beam of no more than one hundred seventy-five (175) feet, and a draft of no more than forty (40) feet, which LNG Tankers can safely reach, fully laden, and safely depart, fully laden, and at which LNG Tankers can lie safely berthed and load and unload safely afloat; |
(c) | lighting sufficient to permit loading operations by day or by night, to the extent permitted by Governmental Authorities and Pilots (it being acknowledged, however, that Seller shall in no event be obligated to allow nighttime berthing operations at the Sabine Pass Facility if Seller determines that such operations during nighttime hours could pose safety or operational risks to the Sabine Pass Facility, an LNG Tanker, or a Third Party); |
(d) | facilities capable of transferring LNG at a rate of up to an average of twelve thousand (12,000) Cubic Meters per hour at the Delivery Point, with three (3) LNG transfer arms each having a reasonable operating envelope to allow for ship movement and manifold strainers of sixty (60) mesh; |
(e) | a vapor return line system of sufficient capacity to allow for transfer of Gas necessary for safe cargo operations of an LNG Tanker at the required rates, pressures and temperatures; |
(f) | facilities allowing ingress and egress between the Sabine Pass Facility and the LNG Tanker by (i) representatives of Governmental Authorities for purposes of LNG transfer operations; and (ii) an independent surveyor for purposes of conducting tests and measurements of LNG on board the LNG Tanker; |
(g) | LNG storage facilities, with a total gross capacity of approximately three hundred twenty thousand (320,000) Cubic Meters of LNG (expandable at Seller's option by an additional amount up to one hundred sixty thousand (160,000) Cubic Meters of LNG); and |
(h) | LNG liquefaction facilities with each train having the capacity to liquefy Gas and produce not less than two hundred ninety-one thousand seven hundred (291,700) tonnes per Month of LNG, using the ConocoPhillips Optimized Cascade process under license from ConocoPhillips, six (6) General Electric LM2500+ G4 gas turbine driven compressor sets with inlet air humidification, air cooled heat |
7.2.3 | Services and facilities not provided by Seller include the following: (a) facilities and loading lines for liquid or gaseous nitrogen to service an LNG Tanker; (b) facilities for providing bunkers; (c) facilities for the handling and delivery to the LNG Tanker of ship's stores, provisions and spare parts; and (d) nitrogen rejection or natural gas liquids (NGL) removal. Towing, escort, line handling, and pilot services will not be provided or made available by Seller; Buyer shall be required to obtain such services as described in Section 7.5.3. |
7.3 | Compatibility of the Sabine Pass Facility with LNG Tankers |
7.3.1 | Buyer shall ensure, at no cost to Seller, that each of the LNG Tankers is fully compatible with the general specifications set forth in Section 7.2.2 and any modifications made to the Sabine Pass Facility in accordance with Section 7.3.2. Should an LNG Tanker fail materially either to be compatible with the Sabine Pass Facility, or to be in compliance with the provisions of Sections 7.5 and 7.6, Buyer shall not employ such LNG Tanker until it has been modified to be so compatible or to so comply. |
7.3.2 | The Parties agree that, after the Effective Date, Seller shall be entitled to modify the Sabine Pass Facility in any manner whatsoever, provided that: (x) such modifications do not render the Sabine Pass Facility incompatible with an LNG Tanker that is compatible with the general specifications set forth in Section 7.2.2; (y) such modifications, once finalized, do not reduce the ability of Seller to make available LNG; and (z) such modifications do not otherwise conflict with Seller's obligations hereunder. Notwithstanding the foregoing, Seller may modify the Sabine Pass Facility in a manner that would render it incompatible with an LNG Tanker provided that such modification is required by and is made pursuant to a change in Applicable Laws, Approvals, or International Standards, or is required for safety or environmental reasons. |
7.4 | Buyer Inspection Rights in Respect of the Sabine Pass Facility |
7.4.1 | Upon obtaining Seller's prior written consent, which consent shall not be unreasonably withheld or delayed, a reasonable number of Buyer's designated representatives may from time to time (including during the period of construction of the liquefaction facilities) inspect the operation of the Sabine Pass Facility so long as such inspection occurs from 8:00 a.m. |
7.4.2 | Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims and Losses resulting from Buyer's inspection of the Sabine Pass Facility pursuant to Section 7.4.1. |
7.5 | LNG Tankers |
7.5.1 | Buyer shall cause each LNG Tanker to comply with the requirements of this Section 7.5 and the requirements of Section 7.6 in all respects. |
7.5.2 | Each LNG Tanker shall comply with the regulations of, and obtain all Approvals required by, Governmental Authorities to enable such LNG Tanker to enter, leave and carry out all required operations at the Sabine Pass Facility. Each LNG Tanker shall at all times have on board valid documentation evidencing all such Approvals. Each LNG Tanker shall comply fully with the International Safety Management Code for the Safe Operation of Ships and Pollution Prevention effective July 1st, 1998, as amended from time to time, and at all times be in possession of valid documents of compliance and safety management certificates, and can demonstrate that the LNG Tanker has an effective management system in operation that addresses all identified risks, and provides proper controls for dealing with these risks. |
7.5.3 | Buyer shall cause Transporter to enter into a tug services agreement (in the form attached hereto as Exhibit E) with Sabine Pass Tug Services, LLC to provide such number and types of tugs, fireboats and escort vessels as are required by Governmental Authorities to attend the LNG Tanker so as to permit safe and efficient movement of the LNG Tanker within the maritime safety areas located in the approaches to and from the Sabine Pass Facility. The fee for tug services pursuant to such tug services agreement shall be as set from time-to-time by Sabine Pass Tug Services, LLC, but shall always be applied on a non-discriminatory basis among all long-term customers (both regasification and liquefaction) of the Sabine Pass Facility. Buyer and Transporter shall be permitted to use other tugs, fireboats and escort vessels |
7.5.4 | Buyer shall pay all Port Charges directly to the appropriate Person. All charges payable by reason of any LNG Tanker having to shift from berth at the Sabine Pass Facility as a result of the action or inaction of a Party shall be paid by such Party. |
7.5.5 | Each LNG Tanker must satisfy the following requirements: |
(a) | Except as otherwise mutually agreed in writing by the Parties, each LNG Tanker shall be compatible with the specifications of the Sabine Pass Facility identified in Section 7.2.2 and any modifications to the Sabine Pass Facility pursuant to Section 7.3.2, and shall be of a sufficient size to load the applicable Scheduled Cargo Quantity (subject to the Operational Tolerance). If Buyer's LNG Tanker is not capable of loading the applicable Scheduled Cargo Quantity (subject to the Operational Tolerance), Buyer shall be deemed to have failed to take the shortfall quantity and Section 5.5 shall apply, except to the extent that such failure is attributable to Seller's delivery of LNG that has a Gross Heating Value that is less than the value identified by Seller pursuant to Section 8.1.1(a). |
(b) | Except as otherwise agreed in writing by Seller, which agreement shall not be unreasonably withheld, each LNG Tanker shall have a gross volumetric capacity between one hundred thirty-five thousand (135,000) Cubic Meters and one hundred eighty thousand (180,000) Cubic Meters. |
(c) | Each LNG Tanker shall be, in accordance with International Standards, (i) fit in every way for the safe loading, unloading, handling and carrying of LNG in bulk at atmospheric pressure; and (ii) tight, staunch, strong and otherwise seaworthy with cargo handling and storage systems (including instrumentation) necessary for the safe loading, unloading, handling, carrying and measuring of LNG in good order and condition. |
(d) | Each LNG Tanker shall at all times be maintained in class with any of the following: American Bureau of Shipping, Lloyd's Register, Bureau Veritas, Det Norske Veritas or any other classification society that is (i) a member of International Association of Classification Societies Ltd. (IACS) and (ii) mutually agreeable to the Parties. |
(e) | Each LNG Tanker shall have been constructed to all applicable International Standards (including the International Code for the Construction and Equipment of Ships Carrying Liquefied Gases in Bulk). |
(f) | Each LNG Tanker shall comply with, and shall be fully equipped, supplied, operated, and maintained to comply with, all applicable International Standards and Applicable Laws, including those that relate to seaworthiness, design, safety, environmental protection, navigation, and other operational matters, and all procedures, permits, and approvals of Governmental Authorities for LNG vessels that are required for the transportation and loading of LNG at the Loading Port. Unless approved by Seller in writing, which approval shall not be unreasonably withheld or delayed, an LNG Tanker shall be prohibited from engaging in any maintenance, repair or in-water surveys while berthed at the Sabine Pass Facility. Each LNG Tanker shall comply fully with the guidelines of any Governmental Authority of the United States of America, including the National Oceanographic and Atmospheric Administration (NOAA), in relation to actions to avoid strikes in the waters of the United States of America with protected sea turtles and cetaceans (e.g., whales and other marine mammals) and with regard to the reporting of any strike by the LNG Tanker which causes injury to such protected species. |
(g) | The officers and crew of each LNG Tanker shall have the ability, experience, licenses and training commensurate with the performance of their duties in accordance with internationally accepted standards with which it is customary for Reasonable and Prudent Operators of LNG vessels to comply and as required by Governmental Authorities and any labor organization having jurisdiction over the LNG Tanker or her crew. Without in any way limiting the foregoing, the master, chief engineer, all cargo engineers and all deck officers shall be fluent in written and oral English and shall maintain all records and provide all reports with respect to the LNG Tanker in English. |
(h) | Each LNG Tanker shall have communication equipment complying with applicable regulations of Governmental Authorities and permitting such LNG Tanker to be in constant communication with the Sabine Pass Facility and with other vessels in the area (including fireboats, escort vessels and other vessels employed in port operations). |
(i) | Provided that the Sabine Pass Facility supplies a suitable vapor return line meeting the requirements of Section 7.2.2, then: |
(i) | an LNG Tanker with an LNG cargo containment capacity less than or equal to one hundred forty thousand (140,000) Cubic Meters shall be capable of loading a full cargo of LNG in a maximum of fifteen (15) hours; and |
(ii) | an LNG Tanker with an LNG cargo containment capacity greater than one hundred forty thousand (140,000) Cubic Meters shall be capable of loading a full cargo of LNG in the number of hours derived after applying the following formula: |
(j) | Each LNG Tanker shall procure and maintain Hull and Machinery Insurance and P&I Insurance in accordance with Section 15.6. |
7.6 | LNG Tanker Inspections; LNG Tanker Vetting Procedures; Right to Reject LNG Tanker |
7.6.1 | During the Term, on prior reasonable notice to Buyer, Seller may, at its sole risk, send its representatives (including an independent internationally recognized maritime consultant) to inspect during normal working hours any LNG Tanker as Seller may consider necessary to ascertain whether the LNG Tanker complies with this Agreement. Seller shall bear the costs and expenses in connection with any inspection conducted hereunder. Any such inspection may include, as far as is practicable having regard to the LNG Tanker's operational schedule, examination of the records related to the LNG Tanker's hull, cargo and ballast tanks, machinery, boilers, auxiliaries and equipment; examination of the LNG Tanker's deck, engine and official log books; review of records of surveys by the LNG Tanker's classification society and relevant Governmental Authorities; and review of the LNG Tanker's operating procedures and performance of surveys, both in port and at sea. Any inspection carried out pursuant to this Section 7.6.1: (a) shall not interfere with, or hinder, any LNG Tanker's safe and efficient construction or operation; and (b) shall not entitle Seller or any of its representatives to make |
7.6.2 | Buyer shall comply with all LNG Tanker vetting procedures, as set forth in the Sabine Pass Marine Operations Manual. |
7.6.3 | Seller shall have the right to reject any LNG vessel that Buyer intends to use to take delivery of LNG hereunder at the Sabine Pass Facility if such LNG vessel does not comply materially with the provisions of this Agreement, provided that: |
(a) | neither the exercise nor the non-exercise of such right shall reduce the responsibility of Buyer to Seller in respect of such LNG vessel and her operation, nor increase Seller's responsibilities to Buyer or Third Parties for the same; and |
(b) | Buyer's obligations under this Agreement shall not be excused or suspended by reason of Buyer's inability (pursuant to the foregoing) to use a vessel as an LNG Tanker. |
7.7 | Port Liability Agreement |
7.7.1 | Buyer shall cause Transporter or the master of each LNG Tanker (acting on behalf of the ship-owner and charterer) making use of the port or marine facilities at the Sabine Pass Facility or the Loading Port thereof on behalf of Buyer, to execute the Port Liability Agreement prior to such LNG Tanker's arrival at the Sabine Pass Facility or the Loading Port thereof. In the event the master of an LNG Tanker fails to execute such Port Liability Agreement, Buyer shall indemnify and hold Seller and its Affiliates harmless from any Claims brought against, or Losses incurred by Seller or any of its Affiliates arising from such failure. |
7.7.2 | Subject to Section 7.7.1 and without prejudice to the terms of the Port Liability Agreement, Seller releases Buyer, its Affiliates, and their respective shareholders, officers, members, directors, employees, designees, representatives, and agents from liability to Seller incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Seller, or for damage to or loss of the Sabine Pass Facility, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Buyer, or any of its Affiliates, shareholders, officers, members, directors, employees, designees, representatives and agents. |
7.7.3 | Subject to Section 7.7.1 and without prejudice to the terms of Section 12 or the Port Liability Agreement, Buyer releases Seller, its Affiliates, and their respective shareholders, officers, members, directors, employees, designees, representatives, and agents from liability to Buyer incident to all Claims and Losses that may exist, arise or be threatened currently or in the future at any time following the Effective Date and whether or not of a type contemplated by either Party at any time, brought by any Person for injury to, illness or death of any employee of Buyer, or for damage to or loss of any LNG Tanker, which injury, illness, death, damage or loss arises out of, is incident to, or results from the performance or failure to perform this Agreement by Seller or its Affiliates, shareholders, officers, members, directors, employees, designees, representatives and agents. |
7.7.4 | The form of Port Liability Agreement may be amended from time to time without consent of Buyer only if after any such amendment the revised terms of such Port Liability Agreement: (a) do not negatively impact Buyer's ability to perform its obligations or exercise its rights under this Agreement, (b) treat Transporter in a non-discriminatory manner in comparison to all other owners and charterers of LNG vessels that use or transit the Loading Port, and (c) do not prevent any Transporter from obtaining, on commercially reasonable terms, full P&I indemnity coverage from a P&I Club, and such P&I indemnity will cover all Claims and Losses pursuant to such Port Liability Agreement in relation to use of the Loading Port by an LNG Tanker. Seller shall promptly notify Buyer upon any amendment to the Port Liability Agreement and shall provide a copy of the amended Port Liability Agreement to Buyer. |
7.8 | Sabine Pass Marine Operations Manual |
7.9 | Loading of LNG Tankers |
7.9.1 | Except as otherwise specifically provided, the terms of this Section 7.9 shall apply to all LNG Tankers calling at the Sabine Pass Facility. |
7.9.2 | As soon as practicable after the LNG Tanker's departure from the point of departure en route to the Sabine Pass Facility, Buyer shall notify, or cause the master of the LNG Tanker to notify, Seller of the information specified below (“In-Transit First Notice”): |
(a) | name of the LNG Tanker and, in reasonable detail, the dimensions, specifications, tank temperatures, volume of LNG onboard, operator, and owner of such LNG Tanker; |
(b) | any operational deficiencies in the LNG Tanker that may affect its performance at the Sabine Pass Facility or berth; and |
(c) | the ETA. |
7.9.3 | With respect to each LNG Tanker scheduled to call at the Sabine Pass Facility, Buyer shall give, or cause the master of the LNG Tanker to give, to Seller the following notices: |
(a) | A second notice (“In-Transit Second Notice”), which shall be sent ninety-six (96) hours prior to the ETA set forth in the In-Transit First Notice or as soon as practicable prior to such ETA if the sea time between the point of departure of the LNG Tanker and the Loading Port is less than ninety six (96) hours, stating the LNG Tanker's then ETA. If, thereafter, such ETA changes by more than six (6) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA; |
(b) | The forty-eight (48) hour informational notice as required by the Sabine Pass Marine Operations Manual; |
(c) | A third notice (“In-Transit Third Notice”), which shall be sent twenty-four (24) hours prior to the ETA set forth in the In-Transit Second Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than three (3) hours, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA; |
(d) | A fourth notice (“In-Transit Final Notice”), which shall be sent twelve (12) hours prior to the ETA set forth in the In-Transit Third Notice (as corrected), confirming or amending such ETA. If, thereafter, such ETA changes by more than one (1) hour, Buyer shall give promptly, or cause the master of the LNG Tanker to give promptly, to Seller notice of the corrected ETA; and |
(e) | An NOR, which shall be given at the time prescribed in Section 7.10. |
7.9.4 | Buyer shall have the right to cause a LNG Tanker to burn Gas as fuel during operations at the Sabine Pass Facility (including while conducting cargo transfer operations). The quantity of Gas burned as fuel pursuant to this Section 7.9.4 shall be determined in accordance with Exhibit A. If Buyer exercises its right pursuant to this Section 7.9.4, all amounts of Gas burned as fuel shall be added to the quantity loaded included in Seller's invoice pursuant to Section 10.1.1, but shall have no impact in respect of Buyer's obligations under Section 5. |
7.9.5 | All vapor returned to Seller during cool-down or loading operations may be used or disposed of by Seller without compensation to Buyer. |
7.10 | Notice of Readiness |
7.10.1 | The master of an LNG Tanker arriving at the Sabine Pass Facility, or such master's agent, shall give to Seller its NOR for loading upon arrival of such LNG Tanker at the PBS, provided that such LNG Tanker has all required Approvals from the relevant Governmental Authorities, and is ready, willing, and able, to proceed to berth and load LNG or to commence cool-down operations (as applicable). |
7.10.2 | A valid NOR given under Section 7.10.1 shall become effective as follows: |
(a) | For an LNG Tanker arriving at the PBS at any time prior to the Delivery Window allocated to such LNG Tanker, an NOR shall be deemed effective at the earlier of 6:00 a.m. Central Time on such Delivery Window or the time at which the LNG Tanker is all fast at the berth; |
(b) | For an LNG Tanker arriving at the PBS at any time during the Delivery Window allocated to such LNG Tanker, an NOR shall become effective at the time of its issuance; or |
(c) | For an LNG Tanker arriving at the PBS at any time after the expiration of the Delivery Window, an NOR shall become effective upon Seller's notice to the LNG Tanker that it is ready to receive the LNG Tanker at berth. |
7.11 | Berthing Assignment |
7.11.1 | Seller shall berth an LNG Tanker which has tendered NOR before or during its Delivery Window promptly after Seller determines such LNG Tanker will not interfere with berthing and loading or unloading of any other scheduled LNG vessel with a higher berthing priority but in no event later than the end of the Delivery Window allocated to such LNG Tanker; provided, however, that if Seller does not berth such LNG Tanker by the end of the Delivery Window, but berths such LNG Tanker within seventy-two (72) hours after |
7.11.2 | For each delivery window period, Seller shall determine the berthing priority among LNG vessels which have tendered NOR before or during their scheduled delivery window as follows: |
(a) | The first berthing priority for a delivery window period shall be for an LNG vessel scheduled for such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered Seller its NOR. Once an LNG vessel achieves a first berthing priority pursuant to this Section 7.11.2(a) or 7.11.2(b), such LNG vessel shall maintain such priority until such LNG vessel is berthed, so long as its tendered NOR remains valid; and |
(b) | The second berthing priority for a delivery window period shall be for an LNG vessel scheduled for arrival after such delivery window period. Priority within this group shall be given to the LNG vessel which has first tendered Seller its NOR. An LNG vessel with second berthing priority pursuant to this Section 7.11.2(b) will achieve a first berthing priority on its scheduled delivery window pursuant to Section 7.11.2(a) if such LNG vessel has not been berthed prior to such date, so long as its tendered NOR remains valid. |
7.11.3 | If an LNG Tanker tenders NOR after the end of its Delivery Window, Seller shall use reasonable efforts to berth such LNG Tanker as soon as reasonably practical; provided, however, that, unless otherwise agreed with Buyer, Seller shall have no obligation to use such efforts to berth an LNG Tanker that tenders NOR more than seventy-two (72) hours after the end of its Delivery Window. If, as of the seventy-second (72nd) hour after the end of the Delivery Window, the LNG Tanker has not tendered NOR, and such delay is not attributable to a reason that would result in an extension of allowed berth time under Section 7.14.2(b), Buyer shall be deemed to have failed to take delivery of the Scheduled Cargo Quantity of the relevant cargo and the provisions of Sections 5.5.2 and 5.5.3 shall apply. |
7.11.4 | Seller shall use reasonable efforts (including coordinating with the operator of the Sabine Pass Facility and any Sabine Pass Facility Regasification |
7.12 | Berth Laytime |
7.12.1 | The allotted laytime for each LNG Tanker (“Allotted Laytime”) shall be (i) for an LNG Tanker with an LNG cargo containment capacity of one hundred forty thousand (140,000) Cubic Meters or less, thirty-six (36) hours and (ii) for an LNG Tanker with an LNG cargo containment capacity of greater than one hundred forty thousand (140,000) Cubic Meters, according to the following formula: |
(a) | reasons attributable to Buyer, a Governmental Authority, Transporter, the LNG Tanker or its master, crew, owner or operator or any Third Party outside of the reasonable control of Seller; |
(b) | Force Majeure or Adverse Weather Conditions; |
(c) | unscheduled curtailment or temporary discontinuation of operations at the Sabine Pass Facility by Seller, necessary for reasons of safety, except to the extent such unscheduled curtailment or temporary discontinuation of operations is due to Seller's failure to operate and maintain its facilities as a Reasonable and Prudent Operator; |
(d) | time at berth during cool-down pursuant to Sections 7.16.1(a) and (c); and |
(e) | nighttime transit restrictions. |
7.12.2 | The actual laytime for each LNG Tanker (“Actual Laytime”) shall commence when the NOR is effective and shall end when (i) the LNG transfer and return lines of the LNG Tanker are disconnected from the Sabine Pass Facility's LNG transfer and return lines and (ii) the cargo documents are on board of the LNG Tanker. |
7.12.3 | In the event Actual Laytime exceeds Allotted Laytime (including any |
7.12.4 | If an LNG Tanker is delayed in berthing at the Sabine Pass Facility and/or commencement of LNG transfer due to an event occurring at the Sabine Pass Facility and for a reason that would not result in an extension of Allotted Laytime under Section 7.12.1, and if, as a result thereof, the commencement of LNG transfer is delayed beyond twenty-four (24) hours after NOR is effective, then, for each full hour by which commencement of LNG transfer is delayed beyond such twenty-four (24) hour period, Seller shall pay Buyer as liquidated damages an amount, on account of excess boil-off, equal to the CSP for such Month multiplied by a quantity (in MMBtu) equal to 0.0052% of the cargo containment capacity of such LNG Tanker; provided that in no event shall the quantity of MMBtu used in the calculation of this Section 7.12.4 exceed the quantity of LNG on board the LNG Tanker at the time it issued its valid NOR. Buyer shall invoice Seller for such excess boil-off within thirty (30) Days after the applicable event pursuant to Section 10.1.4. |
7.13 | LNG Transfers at the Sabine Pass Facility |
7.13.1 | Seller shall cooperate with Transporters (or their agents) and with the master of each LNG Tanker to facilitate the continuous and efficient transfer of LNG hereunder. |
7.13.2 | During LNG transfer, Seller shall provide or take receipt of (as applicable), through the Sabine Pass Facility vapor return line, Gas in such quantities as are necessary for the safe transfer of LNG at such rates, pressures and temperatures as may be required by the design of the LNG Tanker. |
7.13.3 | Buyer, in cooperation with Seller, shall cause the LNG Tanker to depart safely and expeditiously from the berth upon completion of LNG transfer. |
7.14 | LNG Tanker Not Ready for LNG Transfer; Excess Laytime |
7.14.1 | If any LNG Tanker previously believed to be ready for LNG transfer is determined to be not ready after being berthed, the NOR shall be invalid, and Seller may direct the LNG Tanker's master to vacate the berth and proceed to anchorage, whether or not other LNG vessels are awaiting the berth, unless it appears reasonably certain to Seller that such LNG Tanker can be made ready without disrupting the overall berthing schedule of the Sabine Pass Facility or operations of the Sabine Pass Facility. When an unready LNG Tanker at anchorage becomes ready for LNG transfer, its master shall notify Seller. If, as a result of such LNG Tanker's not being ready to load, Buyer fails to take a cargo, the provisions of Sections 5.5.2 and 5.5.3 shall apply. |
7.14.2 | The following shall apply with respect to berthing: |
(a) | An LNG Tanker shall complete LNG transfer and vacate the berth as soon as possible but not later than the following allowed laytime: |
(i) | twenty-four (24) hours from the time the LNG Tanker is all fast at the berth, in the case of an LNG Tanker with an LNG cargo containment capacity less than or equal to one hundred forty thousand (140,000) Cubic Meters; or |
(ii) | in accordance with the following formula, in the case of an LNG Tanker with an LNG cargo containment capacity greater than one hundred forty thousand (140,000) Cubic Meters: |
(b) | Notwithstanding the foregoing, the aforementioned time restrictions shall be extended for: (i) reasons attributable to Seller and any Affiliate of Seller, including SPLNG and Sabine Pass Tug Services, LLC; (ii) reasons attributable to a Governmental Authority; (iii) Force Majeure; and (iv) nighttime transit restrictions. |
(c) | If an LNG Tanker fails to depart at the end of its allowed laytime, Seller may direct the LNG Tanker to vacate the berth and proceed to sea at utmost dispatch. Buyer shall reimburse Seller for any and all reasonable and actual Losses that Seller incurs as a result of the LNG Tanker not completing LNG transfer and vacating the berth as required by this Section 7.14.2, including amounts Seller becomes contractually obligated to pay as demurrage or excess boil-off to any Third Party. |
(d) | In the event an LNG Tanker fails to vacate the berth pursuant to this Section 7.14 and Buyer is not taking actions to cause it to vacate the berth, Seller may effect such removal at the expense of Buyer. |
7.15 | Cooperation |
7.15.1 | If any circumstance occurs or is foreseen to occur so as to cause delay to an LNG Tanker or any other LNG vessel in berthing, loading, unloading or departing, Buyer and Seller shall, without prejudice to any other provision of this Agreement, discuss the problem in good faith with each other and, if appropriate, with other users of the Loading Port, and the Parties shall use reasonable efforts to minimize or to avoid the delay, and at the same time shall cooperate with each other and with such other users of the Loading Port, as appropriate, to find countermeasures to minimize or to avoid the occurrence of any similar delay in the future. |
7.15.2 | If Buyer is unable to berth an LNG Tanker during its Delivery Window due to a Force Majeure event, each affected Delivery Window during such period shall be cancelled, to the extent affected; provided, however, that Seller shall use reasonable efforts to reschedule the Delivery Window for such LNG Tanker in accordance with Sections 8.3.2 and 14.7. |
7.16 | Cool-Down and Gas-Up of LNG Tankers |
7.16.1 | Buyer shall be solely responsible for ensuring that each LNG Tanker elected by Buyer for taking a cargo arrives at the Sabine Pass Facility cold and in a state of readiness. Notwithstanding the foregoing and subject to Section 7.16.2, Seller shall provide cool-down service to LNG Tankers at Buyer's request as follows: |
(a) | Seller shall use reasonable efforts (taking into account availability of sufficient berth time) to accept Buyer's request to provide cool-down service for any LNG Tanker, subject to Buyer requesting such cool-down service by notice to Seller as far in advance of the relevant cargo's Delivery Window as is reasonably practicable but in no case less than thirty (30) Days before the relevant cargo's Delivery Window, provided that Seller shall accept Buyer's request to provide |
(b) | Seller shall provide cool-down service without charge to any LNG Tankers requiring cool-down solely as a result of a delay caused by Seller or Seller's Affiliate, but only if such LNG Tanker made no other call between the original Delivery Window and the requested cool-down time; and |
(c) | Seller shall use reasonable efforts, contingent on the availability of sufficient berth time and facilities status to provide cool-down service at any time other than as described in Sections 7.16.1(a)-(b) upon request by Buyer, provided that all LNG provided by Seller for cooling such LNG Tankers shall be sold, delivered and invoiced by Seller, and paid for by Buyer, at a price equal to the CSP. |
7.16.2 | The following shall apply to any cool-down service provided by Seller pursuant to Section 7.16.1: |
(a) | the MMBtu content of the total liquid quantities delivered for cooling, measured before evaporation (without deduction of the quantity of vapor returned from the LNG Tanker), shall be determined by reference to the relevant LNG Tanker's cool-down tables; |
(b) | the Parties will determine by mutual agreement the rates and pressures for delivery of LNG for cool-down, but always in full accordance with safe operating parameters and procedures mutually established and agreed by both the LNG Tanker and the Sabine Pass Facility; and |
(c) | LNG provided during cool down by Seller pursuant to Section 7.16.1 shall not be applied against the Scheduled Cargo Quantity for the relevant cargo. |
7.16.3 | Seller shall use reasonable efforts to obtain all relevant Approvals needed to allow Seller to offer gas-up service to LNG Tankers at the Sabine Pass Facility. |
8. | Annual Delivery Program |
8.1 | Programming Information |
8.1.1 | No later than one hundred eighty (180) Days before the start of each Contract Year, Seller shall provide Buyer with: |
(a) | Seller's good faith estimate of the Gross Heating Value of LNG to be delivered during the coming Contract Year; and |
(b) | the Major Scheduled Maintenance Quantity or Inspection Maintenance Quantity for the Contract Year, if any. |
8.1.2 | Subject to Section 8.3, no less than one hundred ten (110) Days before the start of each Contract Year, Buyer shall notify Seller of Buyer's proposed schedule of receipt of cargoes for each Month of such Contract Year. Such schedule shall be on a reasonably even and ratable basis throughout the year, and Buyer's notice shall include the following information: |
(a) | the LNG Tanker (if known) for each proposed cargo; |
(b) | the Scheduled Cargo Quantity for each proposed cargo; |
(c) | the proposed Delivery Window for each cargo; |
(d) | Buyer's request (if any) for a Round-Up Quantity for such Contract Year; |
(e) | the anticipated Discharge Terminal for each proposed cargo, subject to Section 26.1; and |
(f) | any other information that may affect annual scheduling. |
8.1.3 | Seller will then notify Buyer no less than eighty-five (85) Days before the start of such Contract Year of Seller's proposed schedule of cargoes to be made available in each Month of such Contract Year, exercising reasonable efforts to adopt Buyer's proposed schedule of receipts requested in accordance with Section 8.1.2; provided that if Buyer fails to deliver the notice according to Section 8.1.2, Seller may nevertheless propose a schedule according to the terms of this Section 8.1.3. Such notice shall include the following information: |
(a) | the AACQ for the Contract Year; |
(b) | the Round-Up Quantity or Round-Down Quantity for the Contract Year; |
(c) | any Round-Down Quantity not taken in the previous Contract Year and carried forward to the current Contract Year; |
(d) | any Round-Up Quantity taken in the previous Contract Year and carried forward as a deduction in the current Contract Year; |
(e) | the Major Scheduled Maintenance Quantity or Inspection Maintenance Quantity (if any) for the Contract Year identified by Seller pursuant to Section 8.1.1(b); |
(f) | for each cargo: |
(i) | the LNG Tanker (if specified by Buyer); |
(ii) | the Scheduled Cargo Quantity; |
(iii) | the proposed Delivery Window; and |
(iv) | the Discharge Terminal; and |
(g) | any other information that may affect annual scheduling. |
8.2 | Determination of Annual Delivery Program |
8.2.1 | Not later than ten (10) Days after receipt of Seller's proposed schedule provided under Section 8.1.3, Buyer shall notify Seller if Buyer desires to consult with Seller regarding the proposed schedule, and Seller shall, no later than fifteen (15) Days after receipt of Buyer's notice, meet and consult with Buyer. |
8.2.2 | If, prior to the date that is sixty (60) Days before the start of the coming Contract Year, the Parties have agreed on a schedule of deliveries for such coming Contract Year, then Seller shall issue the delivery schedule agreed by the Parties. If the Parties are unable to agree on a schedule of deliveries for the coming Contract Year, then not later than sixty (60) Days before the start of such Contract Year, Seller shall issue the delivery schedule for such Contract Year containing the information set forth in Section 8.1.3, modified to reflect any changes agreed by the Parties pursuant to Section 8.2.1. The schedule promulgated by Seller shall reflect the exercise of reasonable efforts by Seller to (i) assign to Buyer Delivery Windows that are as close as reasonably practicable to the Delivery Windows proposed by Buyer, and (ii) specify the Scheduled Cargo Quantity with respect to each LNG Tanker as notified by Buyer pursuant to Section 8.1.2. In assigning Delivery Windows Seller shall act in a non-discriminatory manner among Foundation Customers |
8.2.3 | The schedule for deliveries of LNG during the Contract Year established pursuant to this Section 8.2, as amended from time to time in accordance with Section 8.3, is the “Annual Delivery Program” or “ADP”. If Seller fails to issue the schedule provided for in Sections 8.1.3 or 8.2.2, if applicable, then the schedule proposed by Buyer under Section 8.1.2 shall be the ADP for the relevant Contract Year. |
8.2.4 | Seller shall combine the ADP with the similar schedules for the loading of cargoes for the account of other Persons having contractual rights to receive cargoes from Seller at the Sabine Pass Facility, and shall provide to Buyer a combined schedule (the “Composite ADP”) showing all delivery windows that have been committed by Seller, along with available, uncommitted loading windows at the Sabine Pass Facility. Seller shall promptly update the Composite ADP as the ADP is changed pursuant to Section 8.3 or other Persons' delivery windows are changed pursuant to their respective agreements. |
8.3 | Changes to Annual Delivery Program |
8.3.1 | Subject to the remainder of this Section 8.3, Buyer may request by notice a change in the ADP or Ninety Day Schedule for a Contract Year for any reason. Seller may request by notice a change in the Scheduled Cargo Quantity or the Delivery Window for any cargo in the ADP (including any Ninety Day Schedule) for such Contract Year for operational causes affecting Seller, including Force Majeure. |
8.3.2 | As soon as possible after notice has been received pursuant to this Section 8.3, the Parties shall consult with one another in order to examine whether such ADP or Ninety Day Schedule can be revised to accommodate such proposed change(s). Neither Party shall unreasonably withhold its consent to revise the ADP or Ninety Day Schedule in accordance with changes proposed by the other Party; provided that neither Party shall be under any obligation to consent thereto if, in the case of Seller, it is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with Regasification Capacity Users, other Foundation Customers or other buyers of LNG from the Sabine Pass Facility or if, in the case of Buyer, it is unable to agree after the exercise of reasonable efforts to any necessary changes in its arrangements with the LNG Tankers or Buyer's customers or the requested change would impose additional costs or risks upon Buyer. Seller may not withhold its consent to revise the ADP or Ninety Day Schedule if Buyer's proposed change: (a) consists of the movement of a Delivery Window to dates not currently committed under the Composite ADP; (b) the proposed change is, by the exercise of reasonable efforts on the part of Seller, |
8.3.3 | Any change to the ADP or Ninety Day Schedule shall not: (a) unless expressly agreed otherwise by both Parties in such amended ADP or Ninety Day Schedule, affect the obligations pursuant to Section 5 of the Party requesting such change; or (b) result in unreasonably unratable deliveries at any time during a Contract Year. |
8.3.4 | Upon a change to the Delivery Window for a cargo, the ADP and/or Ninety Day Schedule shall be amended accordingly and an updated ADP and/or Ninety Day Schedule shall promptly be provided in writing by Seller to Buyer. |
8.4 | Ninety Day Schedule |
8.5 | Force Majeure Affecting LNG Tanker |
9. | Contract Sales Price |
9.1 | Contract Sales Price |
9.1.1 | The contract sales price (“CSP”) (expressed in USD per MMBtu) for all LNG made available by Seller to Buyer shall be as follows: |
Xy = | the constant applicable for the current Contract Year, as calculated in accordance with Section 9.1.2. |
9.1.2 | Following the Date of First Commercial Delivery, Xy shall be increased annually, effective as of the first Day of each Contract Year, as soon as the relevant data is available from the US Department of Labor Bureau of Labor Statistics on or after January 1st of each calendar year, by adjusting X0 as follows: |
(i) | if at any time the US Department of Labor Bureau of Labor Statistics CPI (All Urban Consumers, U.S., All Items, 1982 - 1984, Not Seasonally Adjusted, Series I.D. CUUR0000SA0) statistics are adjusted for a relevant period following the adjustment of Xy for that period pursuant to this Section 9.1.2, then (A) Xy during that period shall be recalculated pursuant to this Section 9.1.2, (B) all invoices previously issued by Seller during such period shall be treated as Provisional Invoices, and (C) Seller shall issue a revised invoice reflecting any aggregate credit for Buyer, or debit owed by Buyer, as applicable, in respect of all such Provisional Invoices, as soon as reasonably practicable thereafter; |
(ii) | if at any time prior to the end of the Term, any index is discontinued or otherwise no longer published, a comparable index will be substituted pursuant to Section 1.3; and |
(iii) | if at any time prior to the end of the Term, any index is rebased, the formula in this Section 9.1.2 shall be adjusted accordingly to properly reflect the rebasing. |
10. | Invoicing and Payment |
10.1 | Invoices |
10.1.1 | Invoices for Cargoes. Invoices for each cargo made available by Seller and taken by Buyer shall be prepared and delivered by Seller to Buyer promptly following each Delivery Window and receipt of the final inspection certificate applicable to the loading of such cargo. The invoice amount shall be the CSP, multiplied by the quantity of LNG loaded on Buyer's LNG Tanker net of Gas returned to Seller during loading. |
10.1.2 | Invoices for Cargo DoP Payments. Invoices for Cargo DoP Payments owed to Buyer by Seller shall be prepared by Buyer and delivered to Seller promptly following the Delivery Window of each affected cargo and completion of mitigation efforts. |
10.1.3 | Invoices for Cover Damages. Invoices for Cover Damages owed to Seller by Buyer shall be prepared by Seller and delivered to Buyer promptly following the Delivery Window for each affected cargo. |
10.1.4 | Invoices for Other Sums Due. In the event that any sums are due from one Party to the other Party under this Agreement, other than for a reason addressed in Section 10.1.1 through 10.1.3, the Party to whom such sums are owed shall furnish an invoice therefor, describing in reasonable detail the basis for such invoice and providing relevant documents supporting the calculation thereof. |
10.1.5 | Notice. Invoices shall be sent in accordance with Section 25. |
10.1.6 | Provisional Invoices. |
(a) | In the event (i) a rate or index used in the calculation of an amount is not available on a temporary or permanent basis; or (ii) any other relevant information necessary to compute an invoice is not available, the invoicing Party may issue a provisional invoice (“Provisional Invoice”) in an amount calculated, in the case of subsection (i) of this Section 10.1.6(a), in accordance with Section 1.3, and, in the case of subsection (ii) of this Section 10.1.6(a), based on the best estimate of the unavailable information by the Party issuing the Provisional Invoice. A Provisional Invoice shall be deemed to be an invoice issued pursuant to Section 10.1.1 through 10.1.3, as applicable, for the purposes of the payment obligations of Seller or Buyer, as applicable, and shall be subject to subsequent adjustment in accordance with Section 10.1.6(b). |
(b) | If a Provisional Invoice has been issued, the invoicing Party shall issue a final invoice reflecting any credit or debit, as applicable, to the Provisional Invoice as soon as reasonably practicable after the information necessary to compute the payment has been obtained by such Party. Seller and Buyer shall settle such debit or credit amount, as the case may be, when payment of the next invoice is due pursuant to Section 10.2 or, if earlier, upon the termination of this Agreement. |
10.2 | Payment |
10.2.1 | Payments for Cargoes. Invoices issued in accordance with Section 10.1.1 for cargoes made available and taken shall become due and payable by Buyer on the tenth (10th) Day after the date on which Buyer received such invoice. |
10.2.2 | Cargo DoP Payments. Invoices issued in accordance with Section 10.1.2 shall become due and payable on the tenth (10th) Day following receipt by Seller. |
10.2.3 | Payments for Cover Damages. Invoices issued in accordance with Section 10.1.3 shall become due and payable on the tenth (10th) Day following receipt by Buyer. |
10.2.4 | Payments for Other Sums Due. An invoice issued pursuant to Section 10.1.4 shall be paid by the paying Party thereunder not later than twenty (20) Days after receipt of such invoice. |
10.2.5 | Payment Method. All invoices shall be settled by payment in USDs of the sum due by wire transfer of immediately available funds to an account with the bank designated by the other Party in accordance with Section 10.2.6. |
10.2.6 | Designated Bank. Each Party shall designate a bank in a location reasonably acceptable to the other Party for payments under this Agreement. A Party shall designate its bank by notice to the other Party initially not later than one hundred twenty (120) Days prior to the Date of First Commercial Delivery and thereafter not less than thirty (30) Days before any redesignation is to be effective. |
10.2.7 | Payment Date. If any invoice issued pursuant to Section 10.1 would result in a Party being required to make a payment on a Day that is not a Business Day, then the due date for such invoice shall be the immediately succeeding Business Day. For purposes of this Section 10.2.7 only, if Buyer is the Party required to make a payment, “Business Day” means any Day (other than Saturdays, Sundays and national holidays in India) on which commercial |
10.3 | Disputed Invoice |
10.3.1 | Payment Pending Dispute. Absent manifest error, each Party invoiced shall pay all disputed and undisputed amounts due under such invoice without netting or offsetting any amounts owed by the Party receiving the invoice, including taxes (except as provided in Section 11.4), exchange charges, or bank transfer charges. In the case of manifest error, the correct amount shall be paid disregarding such error, and necessary correction and consequent adjustment shall be made within five (5) Business Days after agreement or determination of the correct amount. |
10.3.2 | Timing. Except with respect to Sections 1.3, 10.3.4, and 14, any invoice may be contested by the receiving Party only pursuant to Section 10.5 or if, within a period of thirteen (13) Months after its receipt thereof, that Party serves notice to the other Party questioning the correctness of such invoice. Subject to Section 10.5, if no such notice is served, the invoice shall be deemed correct and accepted by both Parties. |
10.3.3 | Interest. The Party who invoiced and received payment of a sum, subsequently determined not to have been payable under this Agreement to such Party, shall pay interest to the other Party on such amount, at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally paid) on and from the Day when such sum was originally paid until the date of its repayment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety (90) Days, the applicable LIBOR rate for each successive term of ninety (90) Days during that period shall be that in effect on the first Day of that ninety (90) Day period. Interest shall accrue from Day to Day and be calculated on the basis of a three hundred sixty (360) Day year. |
10.3.4 | Measurement or Analyzing Errors. Any errors found in an invoice or credit note which are caused by the inaccuracy of any measuring or analyzing equipment or device shall be corrected in accordance with Exhibit A hereto, as applicable, and shall be settled in the same manner as is set out above in this Section 10.3. |
10.4 | Delay in Payment |
10.4.1 | Interest. If either Seller or Buyer fails to make payment of any sum as and when due under this Agreement, it shall pay interest thereon to the other Party at a rate per annum equal to two percent (2%) above LIBOR (as in effect on the Day when such sum was originally due) on and from the Day when payment was due until the date of payment, provided that, without prejudice to the other terms of this Agreement, if such period lasts longer than ninety |
10.4.2 | Costs and Expenses. Subject to Section 21.1.12, each Party shall bear its own costs (including attorneys' or experts' fees or costs) in respect of enforcement of such Party's rights in any Dispute proceeding as a result of the other Party failing to perform or failing timely to perform its obligations under this Agreement including failing timely to make any payment in accordance with this Agreement. |
10.5 | Audit Rights |
10.6 | Seller's Right to Suspend Performance |
10.6.1 | Seller may suspend delivering any or all subsequent cargoes until the amounts outstanding under such invoice(s) and interest thereon have been paid in full or Buyer has complied with Section 15.3 of the Agreement. |
10.6.2 | In the event of such suspension, Buyer shall not be relieved of any of its obligations under this Agreement, including its obligation to take any LNG, and Section 5.5 will apply with respect to each cargo scheduled in the Annual Delivery Program or Ninety Day Schedule which is not delivered during the suspension. |
10.6.3 | During the period that such suspension is effective, Seller shall have no obligation to make available any cargoes to Buyer. |
10.7 | Final Settlement |
11. | Taxes |
11.1 | Responsibility |
11.2 | Seller Taxes |
(a) | solely on account of the corporate existence of Seller or its Affiliates; |
(b) | in respect of the property, revenue, income, or profits of Seller or its Affiliates (other than taxes required to be deducted or withheld by Buyer from or in respect of any payments (whether in cash or in kind) under this Agreement); |
(c) | subject to Section 11.5, in the United States of America or any political subdivision thereof, that may be levied or assessed upon the sale, use or purchase of LNG, if Seller is required by the United States of America or any political subdivision thereof to collect or remit payment thereof; |
(d) | by the United States of America, or any political subdivision thereof, that relate to the export, loading, storage, processing, transport, ownership of title, or delivery of LNG, up to and at the Delivery Point; and |
(e) | payable by Buyer by reason of a failure by Seller to properly deduct, withhold or pay any taxes described in Section 11.4. |
11.3 | Buyer Taxes |
(a) | solely on account of the corporate existence of Buyer or its Affiliates; |
(b) | in respect of the revenue, income, or profits of Buyer or its Affiliates (other than taxes required to be deducted or withheld by Seller from or in respect of payments (whether in cash or in kind) under this Agreement); |
(c) | in the United States of America or any political subdivision thereof or in any jurisdiction in which any of Buyer's Discharge Terminals are located, or any jurisdiction through which any LNG Tanker transits or on which any LNG Tanker calls, any taxes that relate to the import, unloading, export, loading, storage, processing, transfer, transport, ownership of title, receipt or delivery of LNG after the Delivery Point; and |
(d) | payable by Seller by reason of a failure by Buyer to properly deduct, withhold or pay any taxes described in Section 11.4. |
11.4 | Withholding Taxes |
11.5 | Sales Tax |
11.6 | Mitigation |
11.7 | Refunds |
12. | Quality |
12.1 | Specification |
12.2 | Determining LNG Specifications |
12.3 | Off-Specification LNG |
12.3.1 | If Seller, acting as a Reasonable and Prudent Operator, determines prior to loading a cargo that the LNG is expected not to comply with the Specifications (“Off-Spec LNG”) upon loading, then: |
(a) | Seller shall give notice to Buyer of the extent of the expected variance as soon as practicable (but in no case later than the commencement of loading of the cargo); |
(b) | Buyer shall use reasonable efforts, including coordinating with the Transporter and the operator of the Discharge Terminal, to accept such LNG where the LNG would be acceptable to the Transporter and the operator of the Discharge Terminal, each of them acting in their sole discretion (unless Transporter or such operator is Buyer or an Affiliate of Buyer), and would not prejudice the safe and reliable operation of any LNG Tanker, the Discharge Terminal, and any downstream facilities being supplied regasified LNG; |
(c) | if Buyer can accept delivery of such cargo, then Buyer shall notify Seller of Buyer's estimate of the direct costs to be incurred by Buyer, any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal in transporting and treating such Off-Spec LNG (or to otherwise make such LNG marketable), and, to the extent Seller agrees to such estimate, Buyer shall take delivery of such cargo, and Seller shall reimburse Buyer for all reasonable documented direct costs incurred by Buyer (including costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal in transporting and treating such Off-Spec LNG (or to otherwise make such LNG marketable) prior to and at the Discharge Terminal), provided, however, that Seller's liability shall not exceed one hundred and twenty percent (120%) of the estimate notified by Buyer and agreed by Seller; and |
(d) | if Buyer determines in good faith that it cannot, using reasonable efforts, receive such cargo, or (1) Seller rejects the cost estimate or (2) Buyer anticipates that it might be liable for costs that would not otherwise be reimbursed pursuant to Section 12.3.1(c), then Buyer shall be entitled to reject such cargo by giving Seller notice of rejection within seventy-two (72) hours of Buyer's receipt of Seller's notice. |
12.3.2 | If Off-Spec LNG is delivered to Buyer without Buyer being made aware of the fact that such Off-Spec LNG does not comply with the Specifications, or without Buyer being made aware of the actual extent to which such Off-Spec LNG does not comply with the Specifications, then: |
(a) | if Buyer is able, using reasonable efforts, to transport and treat the Off-Spec LNG to meet the Specifications (or to otherwise make such LNG marketable), then Seller shall reimburse Buyer for all reasonable documented direct costs incurred by Buyer (including direct costs owed to any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal in transporting and treating such Off-Spec LNG received at the Discharge Terminal to meet the Specifications (or to otherwise make such LNG marketable)), in an amount not exceeding one hundred percent (100%) of the product of the delivered quantity of such Off-Spec LNG and the CSP; provided, however, that Buyer, any Affiliate of Buyer, Transporter, and the operator of the Discharge Terminal shall not be required to incur costs in excess of those reimbursable by Seller; or |
(b) | if Buyer determines in good faith that it cannot, using reasonable efforts, transport and treat such Off-Spec LNG to meet the Specifications (or to make such LNG marketable), then: (i) Buyer shall be entitled to reject such Off-Spec LNG by giving Seller notice of such rejection as soon as practicable, and in any case within ninety-six (96) hours after (A) Seller notifies Buyer in writing that such LNG is Off-Spec LNG and the actual extent to which such Off-Spec LNG does not comply with the Specifications or (B) Buyer becomes aware that such LNG is Off-Spec LNG, whichever occurs first; (ii) Buyer shall be entitled to dispose of the loaded portion of such Off-Spec LNG (or regasified LNG produced therefrom) in any manner that Buyer, acting in accordance with the standards of a Reasonable and Prudent Operator, deems appropriate including by directing Seller to offload such Off-Spec LNG at the Loading Port; and (iii) Seller shall reimburse Buyer in respect of and indemnify and hold Buyer harmless from all direct loss, damage, costs and expenses incurred by Buyer, any Affiliate of Buyer, or Transporter as a result of the delivery of such Off-Spec LNG, including in connection with the handling, |
12.3.3 | If Buyer rejects a cargo in accordance with Section 12.3.1(d) or 12.3.2(b), Seller shall be deemed to have failed to make available such cargo and Section 5.6.2 shall apply. |
13. | Measurements and Tests |
13.1 | LNG Measurement and Tests |
13.2 | Parties to Supply Devices |
13.2.1 | Buyer shall supply, operate and maintain, or cause to be supplied, operated and maintained, suitable gauging devices for the LNG tanks of the LNG Tanker, as well as pressure and temperature measuring devices, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are incorporated in the structure of such LNG Tanker or customarily maintained on shipboard. |
13.2.2 | Seller shall supply, operate and maintain, or cause to be supplied, operated and maintained, devices required for collecting samples and for determining quality and composition of the delivered LNG, in accordance with Section 13.3 and Exhibit A, and any other measurement, gauging or testing devices which are necessary to perform the measurement and testing required hereunder at the Loading Port. |
13.3 | Selection of Devices |
13.4 | Tank Gauge Tables of LNG Tanker |
13.5 | Gauging and Measuring LNG Volumes Loaded |
13.6 | Samples for Quality Analysis |
13.7 | Quality Analysis |
13.8 | Operating Procedures |
13.8.1 | Prior to carrying out measurements, gauging and analyses hereunder, the Party responsible for such operations shall notify the designated representative(s) of the other Party, allowing such representative(s) a reasonable opportunity to be present for all operations and computations; provided, however, that the absence of such representative(s) after notification and reasonable opportunity to attend shall not affect the validity of any operation or computation thereupon performed. |
13.8.2 | At the request of either Party, any measurements, gauging and/or analyses provided for in Sections 13.5, 13.6, 13.7 and 13.10.1 shall be witnessed and verified by an independent surveyor agreed upon in writing by Buyer and Seller. The results of verifications and records of measurement shall be maintained in accordance with the terms of Exhibit A. |
13.9 | MMBtu Quantity Delivered |
13.10 | Verification of Accuracy and Correction for Error |
13.10.1 | Each Party shall test and verify the accuracy of its devices at intervals to be agreed between the Parties. In the case of gauging devices of the LNG Tanker, such tests and verifications shall take place during each scheduled |
13.10.2 | Permissible tolerances of the measurement, gauging and testing devices shall be as described in Exhibit A. |
13.11 | Costs and Expenses |
13.11.1 | Except as provided in this Section 13.11, all costs and expenses for testing and verifying measurement, gauging or testing devices shall be borne by the Party whose devices are being tested and verified; provided, however, that representatives of the Parties attending such tests and verifications shall do so at the cost and risk of the Party they represent. |
13.11.2 | In the event that a Party inspects or requests the testing/verification of any of the other Party's devices on an exceptional basis in each case as provided in Section 13.10.1, the Party requesting the testing/verification shall bear all costs thereof. |
13.11.3 | The costs of the independent surveyor: |
(a) | requested by a Party in accordance with Section 13.8.2 shall be borne by the requesting Party; and |
(b) | referred to in Section 13.9 shall be borne equally by Buyer and Seller. |
14. | Force Majeure |
14.1 | Force Majeure |
14.1.1 | Force Majeure may include circumstances of the following kind, provided that such circumstances satisfy the definition of Force Majeure set forth above: |
(a) | acts of God, the government, or a public enemy; strikes, lockout, or other industrial disturbances; |
(b) | wars, blockades or civil disturbances of any kind; epidemics, Adverse Weather Conditions, fires, explosions, arrests and restraints of governments or people; |
(c) | the breakdown or failure of, freezing of, breakage or accident to, or the necessity for making repairs or alterations to any facilities or equipment; |
(d) | in respect of the Seller: (i) loss of, accidental damage to, or inaccessibility to or inoperability of (x) the Sabine Pass Facility or any Connecting Pipeline or (y) the liquefaction and loading facilities at the alternate source agreed by the Parties pursuant to Section 3.1.2 but only with respect to those cargoes which Buyer has agreed may be supplied from such alternate source; and (ii) any event that would constitute an event of force majeure under (A) any agreement that is between Seller and SPLNG and is necessary for Seller to carry out certain obligations hereunder or (B) an agreement between Seller and Cheniere Creole Trail Pipeline, L.P., for Gas transportation services, provided however, that an event of force majeure affecting a party to any such agreement shall constitute Force Majeure under this Agreement only to the extent such event meets the definition of Force Majeure in this Section 14.1; |
(e) | in respect of Buyer, events affecting the ability of any LNG Tanker to receive and transport LNG, subject to Section 14.2.3; and |
(f) | the withdrawal, denial, or expiration of, or failure to obtain, any Approval. |
14.1.2 | Nothing in this Section 14.1 shall be construed to require a Party to observe a higher standard of conduct than that required of a Reasonable and Prudent Operator as a condition to claiming the existence of Force Majeure. |
14.2 | Limitations on Force Majeure |
14.2.1 | Indemnity and Payment Obligations. Notwithstanding Section 14.1, no Force Majeure shall relieve, suspend, or otherwise excuse either Party from performing any obligation to indemnify, reimburse, hold harmless or otherwise pay the other Party under this Agreement. |
14.2.2 | Events Not Force Majeure. The following events shall not constitute Force Majeure: |
(a) | a Party's inability to finance its obligations under this Agreement or the unavailability of funds to pay amounts when due in the currency of payment; |
(b) | the unavailability of, or any event affecting, any facilities at or associated with any loading port or unloading port other than the Sabine Pass Facility or any alternate source agreed by the Parties pursuant to Section 3.1.2; |
(c) | the ability of Seller or Buyer to obtain better economic terms for LNG or Gas from an alternative supplier or buyer, as applicable; |
(d) | changes in either Party's market factors, default of payment obligations or other commercial, financial or economic conditions, including failure or loss of any of Buyer's or Seller's Gas or LNG markets; |
(e) | breakdown or failure of plant or equipment caused by normal wear and tear or by a failure to properly maintain such plant or equipment; and |
(f) | in the case of Buyer, acts of a Governmental Authority of, or changes in Applicable Laws of, India which affect solely or primarily Buyer and are not generally applicable to all public and private entities doing business in India. |
14.2.3 | Force Majeure relief in respect of Buyer for an event described in Section 14.1.1(e) affecting a specific LNG Tanker shall only be available with respect to cargoes that are scheduled to be transported on such LNG Tanker in the applicable Ninety Day Schedule or ADP for such Contract Year, or (to the extent that the ADP for the following Contract Year has been issued by Seller) in the ADP for the following Contract Year. |
14.3 | Notification |
14.3.1 | the estimated period during which performance may be prevented, interfered with or delayed, including, to the extent known or ascertainable, the estimated extent of such reduction in performance; |
14.3.2 | the particulars of the program to be implemented to resume normal performance under this Agreement; and |
14.3.3 | the anticipated portion of Buyer's AACQ for a Contract Year that will not be made available or taken, as the case may be, by reason of Force Majeure. |
14.4 | Measures |
14.5 | No Extension of Term |
14.6 | Settlement of Industrial Disturbances |
14.7 | Foundation Customer Priority |
15. | Liabilities and Indemnification |
15.1 | General |
15.2 | Limitations on Liability |
15.2.1 | Incidental and Consequential Losses. Neither Party shall be liable to the other Party hereunder as a result of any act or omission in the course of or in connection with the performance of this Agreement, for or in respect of: |
(a) | any indirect, incidental, consequential or exemplary losses; |
(b) | any loss of income or profits; |
(c) | except as expressly provided in this Agreement, any failure of performance or delay in performance to the extent relieved by the application of Force Majeure in accordance with Section 14; or |
(d) | except as expressly provided in this Agreement, any losses arising from any claim, demand or action made or brought against the other Party by a Third Party. |
15.2.2 | Exclusive Remedies. A Party's sole liability, and the other Party's exclusive remedy, arising under or in connection with Sections 5.5, 5.6, 7.12.3, 7.12.4, 7.14.2(c), and 12.3 and this Section 15 shall be as set forth in each such provision, respectively. |
15.2.3 | Liquidated Damages. The Parties agree that it would be impracticable to determine accurately the extent of the loss, damage and expenditure that either Party would have in the circumstances described in Sections 5.5, 5.6, 7.12.3 and 7.12.4. Accordingly, the Parties have estimated and agreed in advance that the sole liability, and exclusive remedy for such circumstances shall be as provided in those Sections, and neither Party shall have additional liability as a result of any such circumstances. Each amount described in or determined by the provisions of Sections 5.5, 5.6, 7.12.3 and 7.12.4 is intended to represent a genuine pre-estimate by the Parties as to the loss or damage likely to be suffered by the Party receiving the payment or benefit in each such circumstance. Each Party waives any right to claim or assert, in any arbitration or expert determination pursuant to Section 21 in any action with respect to this Agreement, that any of the exclusive remedies set forth in Sections 5.5, 5.6, 7.12.3 and 7.12.4 do not represent a genuine pre-estimate |
15.2.4 | Express Remedies. The Parties agree that Section 15.2.1 shall not impair a Party's obligation to pay the amounts specified in, or the validity of or limitations imposed by, Sections 5.5, 5.6, 7.12.3, 7.12.4, 7.14.2(c), and 12.3 and shall not result in a right of a Party to make a claim for actual damages (whether direct or indirect) or other non-specified damages under any circumstances for which an express remedy or measure of damages is provided in this Agreement. |
15.2.5 | Remedies in Contract. Except with respect to claims for injunctive relief under Sections 19 and 21.1.11, a Party's sole remedy against the other Party for nonperformance or breach of this Agreement or for any other claim of whatsoever nature arising out of or in relation to this Agreement shall be in contract and no Party shall be liable to another Party (or its Affiliates and contractors and their respective members, directors, officers, employees and agents) in respect of any damages or losses suffered or claims which arise out of, under or in any alleged breach of statutory duty or tortious act or omission or otherwise. |
15.2.6 | Seller Aggregate Liability for Certain Events. |
(a) | Notwithstanding any provision herein to the contrary, the maximum Seller Aggregate Liability as of any given date in respect of any occurrence or series of occurrences shall not exceed the Seller Liability Cap. |
(b) | “Seller Aggregate Liability” shall mean, as of any date of determination, any and all liability of Seller to Buyer under this Agreement, excluding (i) any Seller liabilities under this Agreement for which Seller has already made payment to Buyer as of such date, (ii) any liability caused by the gross negligence or willful misconduct of Seller or an Affiliate of Seller and (iii) any amounts related to an indemnity obligation of Seller. |
(c) | The “Seller Liability Cap” shall be an amount (in USD) equal to: |
(i) | on or prior to the fifth (5th) anniversary of the Date of First Commercial Delivery, USD six hundred million (USD 600,000,000); and |
(ii) | after the fifth (5th) anniversary of the Date of First Commercial Delivery, USD eight hundred million (USD 800,000,000). |
15.2.7 | EXCEPT FOR WARRANTIES OF TITLE AND NO LIENS OR ENCUMBRANCES, AND SUBJECT TO THE PROVISIONS OF THIS |
15.3 | Buyer's Credit Support |
15.4 | Third Party Liability |
(a) | If any Third Party shall notify either Party (the “Indemnified Party”) with respect to any matter (a “Third Party Claim”) that may give rise to a claim for indemnification against the other Party (the “Indemnifying Party”) under this Section 15 or elsewhere in this Agreement, then the Indemnified Party shall promptly notify the Indemnifying Party thereof in writing; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then solely to the extent) the Indemnifying Party thereby is materially prejudiced. |
(b) | The Indemnifying Party will have the right to defend against the Third Party Claim with counsel of its choice reasonably satisfactory to the Indemnified Party so long as (i) the Indemnifying Party notifies the Indemnified Party in writing within fifteen (15) Days after the Indemnified Party has given notice of the Third Party Claim that the Indemnifying Party will indemnify the Indemnified Party from and against any damages the Indemnified Party may suffer resulting from, arising out of, relating to, in the nature of, or caused by the Third Party Claim; (ii) the Indemnifying Party provides the Indemnified Party with evidence reasonably acceptable to the Indemnified Party that the Indemnifying Party will have the financial resources to defend against the Third Party Claim and fulfill its indemnification obligations hereunder; (iii) the Third Party Claim involves only money damages and does not seek an injunction or other equitable relief; (iv) settlement of, or an adverse judgment with respect to, the |
(c) | So long as the Indemnifying Party is conducting the defense of the Third Party Claim in accordance with Section 15.4(b): (i) the Indemnified Party may retain separate co-counsel at its sole cost and expense and participate in the defense of the Third Party Claim; (ii) the Indemnified Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld); and (iii) the Indemnifying Party will not consent to the entry of any judgment or enter into any settlement with respect to the Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld). |
(d) | In the event any of the conditions in Section 15.4(b) is or becomes unsatisfied, or a conflict arises, with regard to the Third Party Claim, between the Indemnified Party and the Indemnifying Party in respect of such Third Party Claim the Indemnified Party may defend against the Third Party Claim in any manner it reasonably may deem appropriate. |
(e) | If either Party gives notice to the other Party of a Third Party Claim pursuant to the provisions of Section 15.4(a) and the notified Party does not give notice that it will indemnify the notifying Party in the manner set out in Section 15.4(b), the notifying Party shall nevertheless send copies of all pleadings and other documents filed in any such Third Party lawsuit to the notified Party and such notified Party may have the right to participate in the defense of the Third Party Claim in any manner permitted by Applicable Law. |
15.5 | Seller's Insurance |
15.5.1 | Seller shall obtain and maintain or cause to be obtained and maintained: |
(a) | insurance for the Sabine Pass Facility to the extent required by Applicable Law, and |
(b) | additional insurance, as is reasonably necessary and available on reasonable commercial terms, against such other risks and at such levels as a Reasonable and Prudent Operator of a shared use LNG receiving, regasification and liquefaction terminal would obtain. |
15.5.2 | Seller shall obtain or cause to be obtained the insurance required by Section 15.5.1 from a reputable insurer (or insurers) reasonably believed to have adequate financial reserves. Seller shall exercise its best efforts, or shall cause the applicable insured Person to use its best efforts, to collect any amount due under such insurance policies. |
15.6 | Buyer's Insurance |
(a) | Hull and Machinery Insurance shall be placed and maintained with reputable marine underwriters; and |
(b) | Protection & Indemnity Insurance (“P&I Insurance”) shall be placed and maintained with full P&I indemnity cover in the ordinary course from a P&I Club, and such LNG Tanker shall be entered for insurance with a P&I Club, including pollution liability standard for LNG vessel and Certificate of Financial Responsibility. |
16. | Safety |
16.1 | General |
16.2 | Third Parties |
17. | Representations, Warranties and Undertakings |
17.1 | Representations and Warranties of Buyer |
17.1.1 | Buyer is and shall remain duly formed and in good standing under the laws of India; |
17.1.2 | Buyer has the requisite power, authority and legal right to execute and deliver, and to perform its obligations under, this Agreement; |
17.1.3 | Buyer has not incurred any liability to any financial advisor, broker or finder for any financial advisory, brokerage, finder's or similar fee or commission in connection with the transactions contemplated by this Agreement for which Seller or any of its Affiliates could be liable; and |
17.1.4 | neither the execution, delivery, nor performance of this Agreement violates or will violate, results or will result in a breach of or constitutes or will constitute a default under any provision of Buyer's organizational documents, any law, judgment, order, decree, rule, or regulation of any court, administrative agency, or other instrumentality of any Governmental Authority or of any other material agreement or instrument to which Buyer is a party. |
17.2 | Representations and Warranties of Seller |
17.2.1 | Seller is and shall remain duly formed and in good standing under the laws of the State of Delaware and duly qualified to do business in the State of Louisiana; |
17.2.2 | Seller has the requisite power, authority and legal right to execute and deliver, and to perform its obligations under this Agreement; |
17.2.3 | Seller has not incurred any liability to any financial advisor, broker or finder for any financial advisory, brokerage, finder's or similar fee or commission in connection with the transactions contemplated by this Agreement for which Buyer or any of its Affiliates could be liable; and |
17.2.4 | neither the execution, delivery, nor performance of this Agreement, violates or will violate, results or will result in a breach of, or constitutes or will constitute a default under, any provision of Seller's organizational documents, |
17.3 | Business Practices |
18. | Exchange of Information |
19. | Confidentiality |
19.1 | Duty of Confidentiality |
(a) | already known to the recipient from sources other than the other Party; |
(b) | already in the public domain (other than as a result of a breach of the terms of this Section 19.1); or |
(c) | independently developed by the recipient; |
19.2 | Permitted Disclosures |
19.2.1 | The Confidential Information, which either Party receives from the other, may be disclosed by such Party: |
(a) | to any Person who is such Party's legal counsel, other professional consultant or adviser, Transporter, insurer, accountant or construction contractor; provided that such disclosure is solely to assist the purpose for which such Person was so engaged; |
(b) | if required and to the extent required by the rules of any recognized stock exchange or agency established in connection therewith upon which the securities of such Party or a company falling within Section 19.2.1(d) are |
(c) | if required and to the extent required by any Applicable Laws, or such Party becomes legally required (by oral questions, interrogatories, request for information or documents, orders issued by any Governmental Authority or any other process) to disclose such information; provided that such Party shall, to the extent practicable, give prior notice to the other Party of the requirement and the terms thereof and shall cooperate with the other Party to minimize the disclosure of the information, seek a protective order or other appropriate remedy, and if such protective order or other remedy is not obtained, then such Party will furnish only that portion of such information that it is legally required to furnish; |
(d) | to any of its Affiliates or shareholders (or any company involved in the provision of advice to any such shareholder for the purposes of this Agreement) and any employee of that Party or of a company to which disclosure is permitted pursuant to this Section 19.2.1(d); |
(e) | to any bona fide intended assignees of a Party's interests under this Agreement; |
(f) | to any Third Party as reasonably necessary for the performance of a Party's obligations under this Agreement; |
(g) | to any arbitrator appointed in accordance with Section 21.1.4, or Expert appointed pursuant to Section 21.2.1; or |
(h) | to any Person reasonably required to see such Confidential Information, including the Lenders, in connection with any bona fide financing or offering or sale of securities by Seller or Buyer or any Affiliate of Seller or Buyer or any Affiliate of any of the shareholders of Seller or Buyer, to comply with the disclosure or other requirements of Applicable Law or of financial institutions or other participants (including rating agencies) in such financing, offering or sale. |
19.2.2 | The Party making the disclosure shall ensure that any Person listed in Section 19.2.1(a), (c), (d), (e), (f) or (g) to which it makes the disclosure (excluding legal counsel) undertakes to hold such Confidential Information subject to confidentiality obligations equivalent to those set out in Section 19.1. In the case of a disclosure to an employee made in accordance with Section 19.2.1(c), the undertaking shall be given by the company on its own behalf and in respect of all its employees. |
19.2.3 | Seller may disclose Confidential Information to its Foundation Customers related to scheduling, operations and other relevant technical information to comply with Seller's performance of Section 8, only to the extent necessary to ensure the |
19.2.4 | No press release concerning the execution of this Agreement shall be issued unless agreed by the Parties. |
19.3 | Duration of Confidentiality |
20. | Default and Termination |
20.1 | Termination Events |
20.1.1 | in respect of either Party, if a Bankruptcy Event has occurred with respect to the other Party; |
20.1.2 | in respect of either Party, if the other Party fails to pay or cause to be paid any amount or amounts in the aggregate due that are in excess of USD seventy-five million (US$75,000,000), for a period of ten (10) Days or more following the due date of the relevant invoice; |
20.1.3 | in respect of either Party, violation of Sections 17.3 or 26.3.1(ii) by the other Party; |
20.1.4 | in respect of either Party, in accordance with Section 2.2.5 of the Agreement; |
20.1.5 | in respect of Seller, if Buyer or assignee (as applicable) has failed to provide the Guaranty required pursuant to Section 15.3, and such failure is not cured by Buyer within ten (10) Business Days thereafter; |
20.1.6 | in respect of Seller, if Buyer or any Guarantor fails to execute any Direct Agreement with Seller's Lenders within sixty (60) Days after Seller's request thereof, provided that such Direct Agreement complies with the requirements in Section 22.4.2; |
20.1.7 | in respect of Buyer, if (a) Seller has declared Force Majeure one or more times and the interruptions resulting from such Force Majeure total twenty-four (24) Months during any thirty-six (36) Month period, and (b) such Force Majeure has resulted in Seller being prevented from making available fifty percent (50%) or more of the annualized ACQ during such periods of Force Majeure; |
20.1.8 | in respect of Seller, if (a) Buyer has declared Force Majeure one or more times and the interruptions resulting from such Force Majeure total twenty-four (24) Months during any thirty-six (36) Month period, and (b) such Force Majeure has resulted in Buyer being prevented from taking fifty percent (50%) or more of the annualized ACQ during such periods of Force Majeure; |
20.1.9 | in respect of Buyer, pursuant to the terms of Section 4.3.2; |
20.2 | Termination |
20.2.1 | Notice of Termination. Upon the occurrence of any Termination Event, subject to Section 20.2.5, the Party which has the right under Section 20.1 to terminate this Agreement (“Terminating Party”) may give notice thereof to the other Party, specifying in reasonable detail the nature of such Termination Event (except that any termination notice with respect to a Termination Event identified in Section 20.1.12 or 20.1.13 shall only be valid if notice thereof is provided within ninety (90) Days after such Termination Event first arose). |
20.2.2 | Timing. Except with respect to the Termination Events described in Section 20.2.3, at any time after the expiry of a period of forty-five (45) Days after the Terminating Party gave notice of a Termination Event pursuant to Section 20.2.1, unless the circumstances constituting the Termination Event have been fully remedied or have ceased to apply, the Terminating Party may terminate this Agreement with immediate effect by giving notice of such termination to the other Party. |
20.2.3 | Certain Events. Upon the occurrence of a Termination Event described in Sections 20.1.1, 20.1.3, 20.1.5, 20.1.6, 20.1.7, 20.1.8, 20.1.10, 20.1.11, 20.1.12, and 20.1.13, the Terminating Party's notice pursuant to Section 20.2.1 shall terminate this Agreement immediately. |
20.2.4 | Rights Accrued Prior to Termination. Termination of this Agreement shall be without prejudice to the rights and liabilities of the Parties accrued prior to or as a result of such termination or claims for breaches of Section 19 that occur during the three (3) year period after termination of this Agreement. |
20.2.5 | Limits to Termination. Neither Seller nor Buyer, respectively, may terminate this Agreement if the Termination Event occurs solely because of a breach by the non-terminating Party arising from events for which that non-terminating Party would otherwise be entitled to terminate this Agreement. |
20.3 | Survival |
21. | Dispute Resolution and Governing Law |
21.1 | Dispute Resolution |
21.1.1 | Arbitration. Any Dispute (other than a Dispute submitted to an Expert under Section 21.2.1) shall be exclusively and definitively resolved through final and binding arbitration, it being the intention of the Parties that this is a broad form arbitration agreement designed to encompass all possible claims and disputes under this Agreement. |
21.1.2 | Rules. The arbitration shall be conducted in accordance with the International Arbitration Rules (the “Rules”) of the American Arbitration Association (“AAA”) (as then in effect). |
21.1.3 | Number of Arbitrators. The arbitral tribunal shall consist of three (3) arbitrators, who shall endeavor to complete the final hearing in the arbitration within six (6) Months after the appointment of the last arbitrator. |
21.1.4 | Method of Appointment of the Arbitrators. If there are only two (2) parties to the Dispute, then each party to the Dispute shall appoint one (1) arbitrator within thirty (30) Days of the filing of the arbitration, and the two arbitrators so appointed shall select the presiding arbitrator within thirty (30) Days after the latter of the two arbitrators has been appointed by the parties to the Dispute. If a party to the Dispute fails to appoint its party-appointed arbitrator or if the two party-appointed arbitrators cannot reach an agreement on the presiding arbitrator within the applicable time period, then the AAA shall serve as the appointing authority and shall appoint the remainder of the three arbitrators not yet appointed. If the arbitration is to be conducted by three arbitrators and there are more than two parties to the Dispute, then within thirty (30) Days of the filing of the arbitration, all claimants shall jointly appoint one arbitrator and all respondents shall jointly appoint one arbitrator, |
21.1.5 | Consolidation. If the Parties initiate multiple arbitration proceedings under this Agreement and/or under any Guaranty, the subject matters of which are related by common questions of law or fact and which could result in conflicting awards or obligations, then either Party may request prior to the appointment of the arbitrators for such multiple or subsequent Disputes that all such proceedings be consolidated into a single arbitral proceeding. Such request shall be directed to the AAA, which shall consolidate appropriate proceedings into a single proceeding unless consolidation would result in undue delay for the arbitration of the Disputes. |
21.1.6 | Place of Arbitration. Unless otherwise agreed by all parties to the Dispute, the place of arbitration shall be London, United Kingdom. |
21.1.7 | Language. The arbitration proceedings shall be conducted in the English language, and the arbitrators shall be fluent in the English language. |
21.1.8 | Entry of Judgment. The award of the arbitral tribunal shall be final and binding. Judgment on the award of the arbitral tribunal may be entered and enforced by any court of competent jurisdiction. The Parties agree that service of process for any action to enforce an award may be accomplished according to the procedures of Section 25, as well as any other procedure authorized by law. |
21.1.9 | Notice. All notices required for any arbitration proceeding shall be deemed properly given if given in accordance with Section 25. |
21.2 | Expert Determination |
21.2.1 | General. In the event of any disagreement between the Parties regarding a measurement under Exhibit A hereto or any other Dispute which the Parties agree to submit to an Expert (in either case, a “Measurement Dispute”), the Parties hereby agree that such Measurement Dispute shall be resolved by an Expert selected as provided in this Section 21.2.1. The Expert is not an arbitrator of the Measurement Dispute and shall not be deemed to be acting in an arbitral capacity. The Party desiring an expert determination shall give the other Party to the Measurement Dispute notice of the request for such determination. If the Parties to the Measurement Dispute are unable to agree upon an Expert within ten (10) Days after receipt of the notice of request for an expert determination, then, upon the request of any of the Parties to the Measurement Dispute, the International Centre for Expertise of the International Chamber of Commerce (“ICC”) shall appoint such Expert and shall administer such expert determination through the ICC's Rules for Expertise. The Expert shall be and remain at all times wholly impartial, and, once appointed, the Expert shall have no ex parte communications with any of the Parties to the Measurement Dispute concerning the expert determination or the underlying Measurement Dispute. The Parties to the Measurement Dispute shall cooperate fully in the expeditious conduct of such expert determination and provide the Expert with access to all facilities, books, records, documents, information and personnel necessary to make a fully informed decision in an expeditious manner. Before issuing a final decision, the Expert shall issue a draft report and allow the Parties to the Measurement Dispute to comment on it. The Expert shall endeavor to resolve the Measurement Dispute within thirty (30) Days (but no later than sixty (60) Days) after his appointment, taking into account the circumstances requiring an expeditious resolution of the matter in dispute. |
21.2.2 | Final and Binding. The Expert's decision shall be final and binding on the Parties to the Measurement Dispute unless challenged in an arbitration pursuant to Section 21.1 within thirty (30) Days of the date the Expert's decision. If challenged, (a) the decision shall remain binding and be implemented unless and until finally replaced by an award of the arbitrators; |
21.2.3 | Arbitration of Expert Determination. In the event that a Party requests expert determination for a Measurement Dispute which raises issues that require determination of other matters in addition to correct measurement under Exhibit A hereto, then either Party may elect to refer the entire Measurement Dispute for arbitration under Section 21.1.1. In such case, the arbitrators shall be competent to make any measurement determination that is part of a Dispute. An expert determination not referred to arbitration shall proceed and shall not be stayed during the pendency of an arbitration. |
21.3 | Governing Law |
21.4 | Immunity |
21.4.1 | Each Party, as to itself and its assets, hereby irrevocably, unconditionally, knowingly and intentionally waives any right of immunity (sovereign or otherwise) and agrees not to claim, or assert any immunity with respect to the matters covered by this Agreement in any arbitration, Expert proceeding, or other action with respect to this Agreement, whether arising by statute or otherwise, that it may have or may subsequently acquire, including rights under the doctrines of sovereign immunity and act of state, immunity from legal process (including service of process or notice, pre-judgment or pre-award attachment, attachment in aid of execution, or otherwise), immunity from jurisdiction or judgment of any court, arbitrator, Expert or tribunal (including any objection or claim on the basis of inconvenient forum), and immunity from enforcement or execution of any award or judgment or any other remedy. |
21.4.2 | Each Party irrevocably, unconditionally, knowingly and intentionally: |
(a) | agrees that the execution, delivery and performance by it of this Agreement constitute private and commercial acts rather than public or governmental acts; |
(b) | consents in respect of the enforcement of any judgment against it in any such proceedings in any jurisdiction and to the giving of any relief or the issue of any process in connection with such proceedings (including the making, enforcement or execution of any such judgment or any order arising out of any such judgment against or in |
22. | Assignments |
22.1 | Merger, Consolidation, Acquisition |
22.2 | Assignment by Buyer |
22.2.1 | Prior Written Consent. Buyer may novate or assign this Agreement in its entirety, for the remainder of the Term, upon the prior written consent of Seller (which consent shall not be unreasonably withheld or delayed), provided that: |
(a) | a Guaranty as required by Section 15.3, if any, is provided to Seller prior to such novation or assignment; and |
(b) | such assignee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is enforceable by Seller. |
22.2.2 | Without Prior Consent. Buyer may novate or assign this Agreement in its entirety, for the remainder of the Term, without Seller's prior consent, to an Affiliate of Buyer, provided that: |
(a) | a Guaranty as required by Section 15.3, if any, is provided to Seller prior to such novation or assignment; |
(b) | such Affiliate assignee assumes all of the obligations of Buyer under this Agreement commencing as of the date of the assignment by execution of a copy of this Agreement in its own name (countersigned by Seller) or by execution of a binding assignment and assumption agreement which is enforceable by Seller; and |
(c) | performance of this Agreement by Seller with such Affiliate assignee would comply with Applicable Laws and all relevant Approvals. |
22.2.3 | Further Obligations. Upon an assignment in whole by Buyer in accordance with this Section 22.2, Buyer shall be released from all further obligation, duty or liability under this Agreement, other than any obligation, duty, or |
22.3 | Assignments by Seller |
22.3.1 | Prior Written Consent. Seller may novate or assign this Agreement in its entirety, for the remainder of the Term, upon the prior written consent of Buyer (which consent shall not be unreasonably withheld or delayed), provided that the assignee assumes all of the obligations of Seller under this Agreement commencing as of the date of the assignment by execution of a copy of this Agreement in its own name (countersigned by Buyer) or by execution of a binding assignment and assumption agreement which is enforceable by Buyer; provided, however, that if the assignee is an Affiliate of Seller and will be an owner of the Sabine Liquefaction Facility, Buyer shall be deemed to consent to such assignment of this Agreement. |
22.3.2 | Without Prior Consent. Seller may novate or assign this Agreement in its entirety, for the remainder of the Term, without Buyer's prior consent, to Seller's Lenders or SPLNG's Lenders, provided that such Lender assumes all of the obligations of Seller under this Agreement commencing on the date of the assignment by execution of a copy of this Agreement in its own name (countersigned by Buyer) or by execution of a binding assignment and assumption agreement which is enforceable by Buyer. |
22.3.3 | Further Obligations. Upon an assignment by Seller, in accordance with this Section 22.3, Seller shall be released from all further obligation, duty or liability under this Agreement other than any obligation, duty or liability arising prior to the date of effectiveness of such assignment. |
22.4 | Seller Financing |
22.4.1 | Lender Financing. Seller shall have the right to obtain financing from Lenders. In connection with any financing or refinancing of the Sabine Liquefaction Facility, Buyer, shall, if so requested by Seller, deliver to Seller's Lenders or the agent acting on behalf of any such Lenders (“Lenders' Agent”) certified copies of its corporate charter and by-laws, resolutions, incumbency certificates, financial statements, and such other items as available and upon reasonable request by Lenders or Lenders' Agent. |
22.4.2 | Assignment as Security. Buyer further acknowledges and agrees that Seller may assign, transfer, or otherwise encumber, all or any of its rights, benefits and obligations under this Agreement or any Guaranty to such Lenders or Lenders' Agent as security for its obligations to Lenders. Accordingly, upon Seller's request pursuant to a notice hereunder, Buyer shall enter into, and in the case of a Guaranty, Buyer shall cause the Guarantor to enter into, direct agreements (each, a “Direct Agreement”) that: |
(a) | provide for the assignment and transfer of the assigning Person's rights and obligations under this Agreement or the relevant other agreement to a nominee of Lender following a default by the assigning Person under its lending arrangement; and |
(b) | (i) are substantially in the form of Exhibit D (or in the case of a Guarantor, Exhibit D with appropriate modifications), with such revisions as may be required by the Lenders or Lenders' Agent so long as such changes do not materially affect Buyer's or any Guarantor's rights or obligations under this Agreement or any Guaranty, and (ii) such further undertakings that are normal and customary in project financings or refinancings of this type; provided, however, that Buyer shall not be required to provide (or cause to be provided) any guaranty or similar commitment other than the Guaranty (if required pursuant to Section 15.3) in favor of the Lenders, Seller or any other Person. |
23. | Contract Language |
24. | Miscellaneous |
24.1 | Disclaimer of Agency |
24.2 | Entire Agreement |
24.3 | Third Party Beneficiaries |
24.4 | Amendments and Waiver |
24.5 | Exclusion |
24.6 | Further Assurances |
25. | Notices |
25.1 | Form of Notice |
25.1.1 | Except as expressly set forth herein, any notice, invoice or other communication from one of the Parties to the other Party (or, where contemplated in this Agreement, from or to the Transporter or the master of the LNG Tanker), which is required or permitted to be made by the provisions of this Agreement shall be: |
(a) | made in the English language; |
(b) | made in writing; |
(c) | (i) delivered by hand or sent by courier to the address of the other Party which is shown below or to such other address as the other Party shall by notice require or; (ii) be sent by facsimile to the facsimile number of the other Party which is shown below or to such other facsimile number as the other Party shall by notice require or; (iii) with respect to any notice, invoice or other communication to be sent pursuant to Sections 7, 8 or 12 (or others as may be agreed by the Parties), be sent by electronic mail to the e-mail address of the other Party which is show below or to such other e-mail address as |
(d) | marked for the attention of the Person(s) there referred to or to such other Person(s) as the other Party shall by notice require. |
25.1.2 | The addresses of the Parties for service of notices are as follows: |
25.2 | Effective Time of Notice |
25.2.1 | Any notice, invoice or other communication made by one Party to the other Party in accordance with the foregoing provisions of this Section 25 shall be deemed to be received by the other Party if delivered by hand or by courier, on the Day on which it is received at that Party's address or, if sent by facsimile, on the next Day on which the office of the receiving Party is normally open for business following the Day on which it is received in a legible form at the address to which it is properly addressed. The foregoing shall not apply to notices or communications sent by facsimile or e-mail under Sections 7.9.2, 7.9.3, and 7.10, which shall be deemed effective at the time transmitted to the facsimile number shown above or such other number or electronic mail address previously notified by the receiving Party. |
25.2.2 | Without limiting the meaning of the word “received” for the purpose of the preceding paragraph, a notice which is delivered by hand or by courier shall be deemed to have been received at a Party's address if it is placed in any receptacle normally used for the delivery of post to the address of that Party. |
25.2.3 | Any notice given by facsimile or electronic mail shall be subsequently confirmed by letter, unless otherwise agreed, but without prejudice to the validity of the original notice. |
26. | Business Practices |
26.1 | Trade Law Compliance. |
26.2 | Use of LNG |
26.3 | Prohibited Practices |
26.3.1 | Each Party agrees that in connection with this Agreement and the activities contemplated herein, it will take no action, or omit to take any action, which would (i) violate any Applicable Law applicable to that Party, or (ii) cause the other Party to be in violation of any Applicable Law applicable to such other Party, including the U.S. Foreign Corrupt Practices Act, the OECD convention on anti-bribery, the U.K. Bribery Act of 2010, E.U. and E.U. member country anti-bribery and corruption laws, and corruption or any similar statute, regulation, order or convention binding on such other Party, as each may be amended from time to time, and including any implementing regulations promulgated pursuant thereto. |
26.3.2 | Without limiting Section 26.3.1, each Party agrees on behalf of itself, its directors, officers, employees, agents, contractors, and Affiliates, not to pay any fees, commissions or rebates to any employee, officer or agent of the other Party or its Affiliates or shareholders nor provide or cause to be provided to any of them any gifts or entertainment of significant cost or value in connection with this Agreement or in order to influence or induce any actions or inactions in connection with the commercial activities of the Parties hereunder. |
26.4 | Records; Audit |
26.5 | Indemnity |
SELLER: | BUYER: | |||
SABINE PASS LIQUEFACTION, LLC | GAIL (INDIA) LIMITED | |||
/s/ H. Davis Thames | /s/ Prabhat Singh | |||
Name: | H. Davis Thames | Name: | Prabhat Singh | |
Title: | Executive Vice President | Title: | Director (Marketing) |
QBOG | = the quantity of boil off gas in MJ consumed by the LNG tanker during loading, calculated as follows: |
V2 | = the quantity of natural gas consumed by the LNG tanker during loading (as calculated pursuant to the below formula), stated in kg and rounded to the nearest kg; and |
55.575 = | the heating value of the vapor (assumed to be 100% of methane) stated in MJ/kg at standard reference conditions (15˚C, 1.01325 bar) for both combustion & metering references (tables below). |
V2 | = the quantity of natural gas consumed by the LNG tanker during loading, stated in kg; |
Vf | = the reading of Natural Gas Consumption Meter on board the tanker after the completion of loading, stated in kg; and |
Vi | = the reading of Natural Gas Consumption Meter on board the tanker before the start of loading, stated in kg. |
Component | Hi (in MJ/kg) | Mi (in kg/kmol) |
Methane | 55.575 | 16.0425 |
Ethane | 51.951 | 30.0690 |
Propane | 50.369 | 44.0956 |
Iso-Butane | 49.388 | 58.1222 |
N-Butane | 49.546 | 58.1222 |
Iso-Pentane | 48.950 | 72.1488 |
N-Pentane | 49.045 | 72.1488 |
N-Hexane | 48.715 | 86.1754 |
Nitrogen | 0 | 28.0134 |
Carbon Dioxide | 0 | 44.0095 |
Oxygen | 0 | 31.9988 |
Temperature | -150°C | -154°C | -158°C | -160°C | -162°C | -166°C | -170°C |
Methane | 0.039579 | 0.038983 | 0.038419 | 0.038148 | 0.037884 | 0.037375 | 0.036890 |
Ethane | 0.048805 | 0.048455 | 0.048111 | 0.047942 | 0.047774 | 0.047442 | 0.047116 |
Propane | 0.063417 | 0.063045 | 0.062678 | 0.062497 | 0.062316 | 0.061957 | 0.061602 |
Iso-Butane | 0.079374 | 0.078962 | 0.078554 | 0.078352 | 0.078151 | 0.077751 | 0.077356 |
N-Butane | 0.077847 | 0.077456 | 0.077068 | 0.076876 | 0.076684 | 0.076303 | 0.075926 |
Iso-Pentane | 0.092817 | 0.092377 | 0.091939 | 0.091721 | 0.091504 | 0.091071 | 0.090641 |
N-Pentane | 0.092643 | 0.092217 | 0.091794 | 0.091583 | 0.091373 | 0.090953 | 0.090535 |
N-Hexane | 0.106020 | 0.105570 | 0.105122 | 0.104899 | 0.104677 | 0.104236 | 0.103800 |
Nitrogen | 0.055877 | 0.051921 | 0.048488 | 0.046995 | 0.045702 | 0.043543 | 0.041779 |
Carbon Diox | 0.027950 | 0.027650 | 0.027300 | 0.027200 | 0.027000 | 0.026700 | 0.026400 |
Oxygen | 0.03367 | 0.03275 | 0.03191 | 0.03151 | 0.03115 | 0.03045 | 0.02980 |
Molecular Mass of Mixture | -150°C | -154°C | -158°C | -160°C | -162°C | -166°C | -170°C | |
16.0 | -0.000012 | -0.000010 | -0.000009 | -0.000009 | -0.000008 | -0.000007 | -0.000007 | |
16.5 | 0.000135 | 0.000118 | 0.000106 | 0.000100 | 0.000094 | 0.000086 | 0.000078 | |
17.0 | 0.000282 | 0.000245 | 0.000221 | 0.000209 | 0.000197 | 0.000179 | 0.000163 | |
17.2 | 0.000337 | 0.000293 | 0.000261 | 0.000248 | 0.000235 | 0.000214 | 0.000195 | |
17.4 | 0.000392 | 0.000342 | 0.000301 | 0.000287 | 0.000274 | 0.000250 | 0.000228 | |
17.6 | 0.000447 | 0.000390 | 0.000342 | 0.000327 | 0.000312 | 0.000286 | 0.000260 | |
17.8 | 0.000502 | 0.000438 | 0.000382 | 0.000366 | 0.000351 | 0.000321 | 0.000293 | |
18.0 | 0.000557 | 0.000486 | 0.000422 | 0.000405 | 0.000389 | 0.000357 | 0.000325 | |
18.2 | 0.000597 | 0.000526 | 0.000460 | 0.000441 | 0.000423 | 0.000385 | 0.000349 | |
18.4 | 0.000637 | 0.000566 | 0.000499 | 0.000477 | 0.000456 | 0.000412 | 0.000373 | |
18.6 | 0.000677 | 0.000605 |