LNG projects are structured in a variety of ways. There is no standard structure; However, the toll model has been used in several recent LNG export projects. With regard to the toll model, the considerations highlighted in this document mainly concern a project toll model, unlike a third-party toll (discussed at the end of the document at a very high level). Squadron Energy Group`s Australian Industrial Energy Group has signed a long-term lease agreement with NSW Ports for a port site in Port Kembla, 112 km south of Sydney, for the development of the company`s LNG import terminal project. Toll systems are complex and critical elements of the structure of the LNG project. The mechanism for allocating LNG to project participants and monetizing their gas rights is incorporated into the toll and cancellation agreement. Continuity of toll agreements between different toll partners using joint or common facilities is an essential element in structuring the toll portion of an LNG project. The structuring phase is essential and decisions taken at an early stage will guide the negotiations and advance the approach to documentation. ORLANDO – As gas prices rise and electricity prices rise, more and more companies are turning to tolls to finance and share the risk of building new commercial power plants, traders say. Unlike other provisions of a toll agreement, the royalty structure may not be consistent between projects. To achieve project success, fiscal sustainability is essential and the ability to generate sufficient cash flow to support project debt and other lenders` needs is essential. While lenders may require different forms of security, guaranteeing the source of revenue from the sale of LNG and by-products is essential not only for banks, but also for other project participants.
It is typical that a loyalty agreement (often offshore, for investments in developing countries) is created and a paying body is designated. This gives banks and project participants a guarantee on revenues. The use of a secure trust contract gives banks the comfort of having control of the project`s debt proceeds, (ii) the toll company guarantees that their toll is paid, and (iii) project participants ensure that payment is made for the liability of a toll company.