Tolling Agreement Infrastructure
While different forms of security may be required of lenders, a guarantee on the revenue from the toll contract is essential for banks and, to the extent that more than one party is subject to tolls through a facility, including for the customers they deserve. Each participant has their own interest in the viability of the toll company. 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 the entire project is sustainable. 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. With regard to the restructuring of electricity supply contracts and the calculation of returns on equity, the value of volatility is an effective buffer from the cash reserves needed to cover debt servicing. While certain conditions may differ in toll agreements between different customers, there are a number of provisions that apply to the same project and should be consistent. Toll customers need continuity in toll agreements in critical areas. In an integrated model, there is a unit of ownership throughout the LNG chain, from production to liquefaction – that is, one or more investors who hold the underlying upstream/PSC concession also own the rights to natural gas reserves. As a result, upstream owners are building the infrastructure needed to produce natural gas and monetize natural gas – the LNG/gasification plant is an important part of such an integrated project, as it is necessary to process/liquefy natural gas and commercialize the resulting LNG. Toll systems are complex and critical elements of the structure of the LNG project.
As part of the toll and repeal agreement, a mechanism is used to allocate LNG to project participants and monetize their gas applications. The number of third-party tolls in the United States is increasing due to increased commercialization of large gas reserves in areas with mature infrastructure and network access to liquefaction facilities. The many North American projects under development and at an early stage of conceptualization certainly show this growth. The way capacity is allocated is not necessarily consistent for different projects. Indeed, a toll project may offer different user fees to different toll customers in LNG liquefaction facilities. The two most typical solutions are (i) the right of a paying customer to process a fixed volume of gas and (ii) the right of a paying customer to have a capacity right (expressed as a percentage) of the processing capacity of LIGL`s facilities. Whether a paying customer has a volumetric or capacity fee (percentage of capacity) affects other terms of each party`s toll agreement. First, the toll user`s rights to overcapacity of the facility will vary.
As a general rule, a party with a capacity right enjoys an overcapacity of the facility and thus has the right to plan overselonizations. If all paying customers have a volumetric fee, toll agreements must indicate how excess capacity is handled for each paying customer. All customers who deserve it may not have the same right to overcapacity in LNG liquefaction facilities.