Implementation of the HNS Convention in the LNG Industry: Singularities, Stakes, Issues and GIIGNL Proposed Solutions

The International Group of Liquefied Natural Gas Importers (GIIGNL) is a non-profit organization founded in December of 1971. It is composed of 56 member companies from 18 different countries across the world and involved in the importation of Liquefied Natural Gas. The main objective of the GIIGNL is to promote the development of activities related to LNG: purchasing, importing, processing, transportation, handling, re-gasification and various uses of LNG. For this purpose, the GIIGNL is particularly involved in promoting the state-of-the art technology in the LNG industry, in communicating about the economic fundamentals of the industry, in enhancing facility operations, in diversifying contractual techniques, and in developing industry positions to be taken in international agencies. As a member of the IOPC Fund since June 2007, the GIIGNL prepared this LNG overview in order to offer a better understanding to state delegations about this specific product and its market and to contribute to the debate on the implementation of the HNS Convention. the first chapter constitutes an introduction to the LNG Industry: presentation of an LNG Chain, overview of the global LNG trade and its growth rate, type of contracts, LNG tankers and technical transportation constraints, liquefaction and re-gasification plants around the world. The second chapter focuses on some singularities of the LNG industry that differentiate LNG from other Hazardous and Noxious Substances: LNG, a clean and unique product and activity, high standards and firm regulations concerning security and maritime safety, high level of investment required for an LNG chain, DES and FOB, the fundamental Incoterms of LNG sales and purchase. The third chapter presents the HNS Convention as potentially applicable to the LNG market: a two tier compensation regime - a new perspective for the LNG industry, a potential impact on LNG sales and purchase agreements, the importance of global HNS ratification within LNG countries. The last chapter concludes with the GIIGNL proposals regarding the LNG contribution to the HNS Fund issue: the GIIGNL contribution to the IOPC Fund Assembly from 2007, the purpose of the IOPC Fund HNS Focus Group and the new Protocol proposal (which would amend the Convention regarding the LNG contribution), the potential solutions explored by the GIIGNL regarding the LNG contribution issue and in particular the GIIGNL proposal for this issue