As the coronavirus spreads, the LNG market faces some dizzying uncertainties.
The broad strokes are clear: sagging demand mixed with low prices and potential storage issues. But the market faces a myriad of smaller, more ambiguous issues too. Namely, the potential for LNG counterparties to invoke force majeure, citing the pandemic as an event that prevents them from performing their contractual obligations.
Some international counterparties have already claimed force majeure. For example, LNG importers in India declared force majeure late last month, leaving at least five fully-laden LNG tankers idling offshore, according to a report by Reuters citing unnamed sources. However, the extent to which such claims pose a legitimate obstacle to LNG suppliers is not altogether clear. To start, companies must consider the core principle of force majeure, Brian Bradshaw, partner at Sidley Austin LLP, told Hart Energy.