CRAFTING BETTER PRICE AND PRICE-

RENEGOTIATION CLAUSES TO
NAVIGATE THE CHANGES IN THE
ATLANTIC BASIN LNG MARKET: AN
ILLUSTRATION OF WHAT NOT TO DO

Patrick Heuer1

ABSTRACT: As the Atlantic Basin market for LNG continues to be challenged by

European energy market liberalization and the shale-gas revolution, smart drafting becomes all
the more important. The dispute between Atlantic LNG and Gas Natural provides a clear
illustration of how badly drafted price and price-renegotiation clauses can cost LNG producers
tens of millions of dollars. This paper examines the idiosyncrasies of the Atlantic Basin LNG
market to explain its effects on producers and then looks at how Atlantic LNG’s SPA failed
because of the Atlantic Basin’s changes. Finally it will offer some improvements to the failed
SPA.

1
The author is an LL.M. Candidate in Petroleum Taxation and Finance at the CEPMLP with a J.D. (Hons) from the
University of Denver Sturm College of Law. He presently leads the oil and gas management consulting practice of
PricewaterhouseCoopers’ Perth, Western Australia office.
Table of Contents
Table of Abbreviations .................................................................................................................. iii

Chapter 1: Introduction ................................................................................................................... 1

Chapter 2: Why the Atlantic Basin is Different .............................................................................. 2

Chapter 3: The Price Clause ........................................................................................................... 6

Chapter 4: The Price-Renegotiation Clause .................................................................................... 7

Chapter 5: Conclusions ................................................................................................................. 11

Reference List ............................................................................................................................... 13

 Table of Abbreviations

LNG Liquid Natural Gas

SPA Sales and Purchase Agreement

t/y Tons per annum

Chapter 1: Introduction
Thanks to energy market liberalization in much of Europe and the hydraulic fracturing-led shale
gas revolution in the United States, the Atlantic Basin Liquid Natural Gas (LNG) market has
transformed substantially in the past decade. As the market continues to find a new equilibrium
in its new paradigm of surplus gas supply and depressed energy prices, LNG producers must
endeavor to craft sound and flexible price and price-renegotiation mechanism in their sales and
purchase agreements (SPAs) to allow them to continue to operate in a dynamic market.
Producers who fail to do so will leave themselves vulnerable to losses totaling millions of dollars
or outright insolvency in the face of a transforming Atlantic Basin LNG market.

Initiated in 2005, the arbitration between Atlantic LNG Company of Trinidad and Tobago
(hereinafter Atlantic LNG), a Trinidad producer, and Gas Natural Aprovisionamientos, SDG,
S.A. (hereinafter Gas Natural)2, a Spanish purchaser, aptly demonstrates the unique features of
the Atlantic Basin LNG market as well as the need to utilize smart price and price-renegotiation
clauses to protect producers in a market of depressed prices. This dispute is highly instructive
and certainly most notable, because while most arbitration remains confidential, Atlantic LNG
challenged the arbitration in U.S. federal court, which allowed for the release of many of the
facts in the case.

As the most notable case, this arbitration provides a lens through which the transformations in
the energy markets on both sides of the Atlantic and their respective effects on the LNG industry
therein can be readily understood. The dispute also serves as a cautionary tale to both suppliers
and purchasers of LNG as to the risks associated with arbitral awards that detour severely from
the aims of both disputants, thus reinforcing the importance of improved contractual price and
price-renegotiation mechanisms.

This paper will first outline why the Atlantic Basin LNG market possesses distinctly different
characteristics from the Pacific or Asian LNG market, it will then proceed to describe, in order,
the price and price-renegotiation clauses in the Atlantic-Gas Natural contract to understand their
failings, and offer modest improvements pertaining thereto.

2
At the time of the commencement of the dispute, Gas Natural was named Enagas.
1
Chapter 2: Why the Atlantic Basin is Different
Interestingly, and almost surely contradictorily, much of the coverage LNG pricing treats it as a
uniform global standard exists,3 but is then quick to relate that there remains no global market for
LNG.4 Rather than present the industry as a whole, commentators should make a clear
delineation between the Atlantic Basin LNG market and the Pacific, or Asian, LNG market.
Both markets demonstrate a number of peculiarities that dramatically change how the trade, and
particularly pricing, proceeds in each, because the pressures and risks in the respective markets
prove to be significantly differentiated from one another. And while sound pricing clauses
remain relevant in both markets, certain specific characteristics of the Atlantic Basin market have
served to reveal clausal weaknesses in LNG contracts executed therein.

Energy Market Liberalization: The first of the two most important characteristics is European
energy liberalization. Beginning in the late 1980s, the United Kingdom began a process of
liberalizing its energy markets by auctioning spare capacity to private, non-regulated entities.5
With the removal of governmental protection of the formerly monopolistic position, an entirely
unprecedented amount of players entered the energy production market. 6 And by eliminating the
monopolistic producer-pricing system, that new group of energy producers became price-takers
who can only sell their product to the market if the prevailing price is sufficient to cover their
cash costs. In a liberalized energy market, energy producers earn rent by lowering their costs
relative to that of the price of energy sold and to competitors’ costs. They do not pass on costs
as readily to the consumer as regulated energy monopolies, because a competitor can take their
market share by lowering prices. Instead, they focus on cutting-costs, much of which puts
downward pressure on the prices of inputs, like LNG. As a result of the consequently lower

3
See, e.g., A Liquid Market, T HE ECONOMIST (14 July 2012), http://www.economist.com/node/21558456.
4
Id.
5
See, David MG Newbery, Electricity Liberalization in Britain: The Quest for a Satisfactory Wholesale Market
Design 26 ENERGY J 43 (2005).
6
See, A. Midttun & S. Thomas, Theoretical Ambiguity and the Weight of Historical Heritage: A Comparative Study
of the British and Norwegian Electricity Liberalization 26 ENERGY P OLICY 179 (1998).
2
costs, jurisdictions on the continent followed Britain’s lead, and began introducing energy
liberalization legislation of their own.7

Policy makers in developed, energy-hungry jurisdictions prize depressed energy prices, because
energy consumers, who also happen to be voters and political donors, benefit. 8 Energy
producers, however, generally suffer. Because no global index price for LNG exits, this proves
particularly true for LNG producers. LNG sales contracts determine the price of sale by pegging
the price to an equivalent energy quantity of an indexed commodity. In the Asian market, LNG
prices have tended to be tied to the price of a basket of crude prices, such as the Japan Crude
Cocktail, or an indexed price, like Brent Crude. In the Atlantic Basin market, however, LNG
prices have tended to be tied to gas price points, like the Henry or Zeebrugge Hubs, rather than
oil. Problematically for Atlantic Basin producers, gas prices fluctuate far more wildly than the
various crude prices, which are historically quite stable. Even more problematic for those
producers is the seeming new paradigm of depressed energy prices stemming from European
liberalization.

Beyond European energy liberalization that has driven decreases in gas prices, and
consequently, LNG prices pegged to gas, there is another phenomenon in the Atlantic Basin
market that has further diminished prices; the shale gas revolution.

Shale Gas: The use of hydraulic fracturing and horizontal drilling technology beginning with
Mitchell Energy in 1998 has allowed for a much-publicized explosion in natural gas production,
predominantly in the United States.9 The benefits of that explosion in production have been
most notable since the mid 2000s. Whereas the United States formerly imported LNG from
Trinidad and Western Africa to meet unsatisfied gas demand, it now finds itself on the purported
path to a new norm of domestically produced, cheap gas.

In the case of the U.S., policy-makers have, again, sought to reap the benefits of cheap energy,
even going so far as to restrict the export of America’s surplus gas to keep the price depressed to

7
See generally, David M. Newbery, Regulatory Challenges to European Electricity Liberalization 9 SWEDISH
ECONOMIC P OLICY REVIEW 9 (2002).
8
See generally, Brenda Shaffer, ENERGY P OLITICS (University of Pennsylvania Press 2009).
9
Scott Tong, The Oil Man Who Figured Out Fracking, MARKETPLACE (7 December 2012),
http://www.marketplace.org/topics/sustainability/oil-man-who-figured-out-fracking.
3
benefit consumers.10 Usually, with a depressed price, gas producers begin to shut in production
to wait for a rebound in prices that correlates with the diminished production, but U.S. producers
have kept their wells in operation despite historically low costs. While producers have kept
producing for a myriad of reasons; contractual obligation, associated production and sale of
propane or butane sufficient to make the project viable, anticipating an increase in price, their
willingness to accept a lower price has directly affected some LNG producers in Trinidad and
North and West Africa who base their price on U.S. gas prices.11

Not only do some Atlantic Basin LNG producers feel a price pinch because of their pricing
formulas; as shale gas has fallen in price, U.S. demand for their LNG has diminished greatly.
From a high of 61,866 MMcf in July 2007, U.S. imports of Trinidadian LNG have fallen to a
summer month low of 8,256 MMcf in June of 2012, an 86% decrease in imported volume.12
Energy producers formerly looked to the United States as a nearly insatiable jurisdiction into
which their products could be sold almost with no regard for the prevailing situation. Now, some
have even predicted that the U.S. will become energy independent within a decade.13

By contrast, the Asian market for LNG has actually experienced a significant increase in demand
for LNG products. Growing demand has increased so rapidly that many now predict a shortage
of LNG by 2013.14 The most notable reason for the present demand spike is Japanese energy
needs. After the 2011 Fukushima disaster, Japan has severely restricted its energy output from
nuclear reactors.15 As a result, the country has sought alternative sources to meet its electricity

10
See, Robert J. Samuelson, Don’t Kill the Shale-Gas Boom, T HE W ASHINGTON P OST (23 December 2012),
http://www.washingtonpost.com/opinions/robert-samuelson-dont-kill-the-shale-gas-boom/2012/12/23/815ceb4c-
4b9c-11e2-b709-667035ff9029_story.html.
11
See generally, Claudia Ines Vasquez Josse & Anne Neumann, Transatlantic Natural Gas Price and Oil Price
Relationships-An Empirical Analysis, 61 SERIE RECHERCHE ECOLE DU P ETROLE ET DES MOTEURS INSTITUTE
FRANCAIS DU P ETROLE 1 (2006).
12
See, U.S. Natural Gas Imports by Country, U.S. ENERGY INFORMATION ADMINISTRATION ,
http://www.eia.gov/dnav/ng/ng_move_impc_s1_m.htm.
13
See, World Energy Outlook 2012, INTERNATIONAL ENERGY AGENCY (2012).
14
Top Economies Facing LNG Price Spike Due to Demand, T HE P ENINSULA (19 January 2013),
http://thepeninsulaqatar.com/business/222461-top-economies-facing-lng-price-spike-due-to-demand.html.
15
Helen Robertson, Japan’s Economy in Crisis as LNG Imports Soar, P ETROLEUM ECONOMIST (7 December
2012), http://www.petroleum-economist.com/Article/3128376/Search/Japans-economy-in-crisis-as-LNG-imports-
soar.html?Keywords=japan+lng&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)&Brand=PE&tabSel
ected=True.
4
demand. Japan, long the world’s largest LNG importer, looked to LNG as the main alternative
to bolster its energy supply. From 2010 to 2012, Japan’s demand for LNG increased by 20
million tons per annum (t/y) from 70 million t/y to 90 million t/y.16 Furthermore, Japan’s nuclear
energy drawdown appears long term as Japan has also negotiated to buy much of the production
from the massive Exxon-Mobil-led Papua New Guinea LNG project17 and has sought stakes in
many of the Western Australian LNG projects.18

That being said, Japan does not drive the Asian demand increase alone, India and China’s
growing economies demand large quantities of energy and those regimes have increasingly come
to depend on LNG to meet that demand.19 From producers as diverse as Australia, Papua New
Guinea, Qatar, and Brunei, Chinese and Indian buyers have engaged long term contracts to buy
large amounts of LNG.20 Similarly, Korea21 and even oil-rich Kuwait22 now seek LNG to add
into their energy production mix.

Asia’s booming demand for LNG stands in stark relief to the Atlantic Basin’s decreasing demand
thanks to U.S. shale gas production. Similarly, to this point, no wide-sweeping energy market
liberalization or other transformational event has occurred in the Asian markets that would put
significant downward pressure on the energy prices that undergird the LNG price. Unfortunately
for Atlantic LNG, when it executed its sales contract to Gas Natural in 1995, it did not foresee or

16
Id.
17
Damon Evans, Total Make Papua New Guinea Play, PETROLEUM ECONOMIST (11 October 2012),
http://www.petroleum-economist.com/Article/3101287/Search/Total-makes-Papua-New-Guinea-
play.html?Keywords=japan+png&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)&Brand=PE&tabSe
lected=True.
18
Robertson, supra note 14.
19
Helen Robertson, Volatility is the New Normal, P ETROLEUM ECONOMIST (17 January 2013),
http://www.petroleum-economist.com/Article/3142534/Search/Volatility-is-the-new-
normal.html?Keywords=china+lng&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)&Brand=PE&tab
Selected=True.
20
Id.
21
Damon Evans, Asia Makes a Splash, P ETROLEUM ECONOMIST (3 January 2013), http://www.petroleum-
economist.com/Article/3136696/Search/Asia-makes-a-
splash.html?Keywords=korea+lng&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)&Brand=PE&tabS
elected=True.
22
Kwok W. Wan, Kuwait’s Growing Need for LNG Imports, P ETROLEUM ECONOMIST (5 October 2011),
http://www.petroleum-economist.com/Article/2912531/Search/Kuwaits-growing-need-for-LNG-
imports.html?Keywords=kuwait+lng&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)&Brand=PE&ta
bSelected=True.
5
properly understand those two major changes coming to the Atlantic Basin market, which
severely undermined its price and price-renegotiation clauses.

Chapter 3: The Price Clause

In July 1995, Atlantic LNG and Gas Natural entered into a twenty-year SPA that would begin
delivery in 1999.23 The price clause contained in the SPA was unremarkable and standard; a
base price with a multiplier that was indexed every quarter to European prices of certain
petroleum substitutes.24 Certainly, such a pricing mechanism would not cause alarm for most.
After all, Oman had previously agreed to a price clause with South Korean LNG buyers that
provided for no floor in its crude pegged price,25 meaning that regardless of how low the price of
its crude index, Oman still sold its LNG at that low price.

By 1996, however, the EU issued its first directive to begin gradually liberalizing its energy
markets, including gas markets.26 While Atlantic LNG did know about the EU’s policy push,27
there is no evidence to indicate if it influenced the decision making process during negotiations
over the SPA. That gradual liberalization following Britain’s lead reduced European prices for
many of the petroleum substitutes to which the SPA’s LNG price was indexed. In consequence,
the price that Gas Natural paid to Atlantic LNG also fell.28

Under normal circumstances, while Atlantic LNG suffered a lower price for its product, Gas
Natural would likewise suffer a lower price for its gas sold to end-users. In the present case,
however, Gas Natural had a contractual means of escaping the depressed Iberian gas market.
The SPA allowed for Gas Natural to resell the LNG to a receiving terminal in Massachusetts.
Despite that resale clause, the SPA’s price clause made no mention of the possibility of resale.

23
Gas Natural Aprovisionamientos, SDG, S.A. v. Atlantic LNG Company of Trinidad and Tobago in the United
States District Court for the Southern District of New York (2008 WL 4344525 (S.D.N.Y.).
24
It remains unclear which specific petroleum substitutes were used in the formula because the court did not reveal
them in its decision.
25
EDWARD B. F LOWERS, U.S. UTILITY MERGERS AND THE RESTRUCTURING OF THE NEW G LOBAL P OWER
INDUSTRY 86 (Greenwood Publishing Group 1998).
26
See, Newbery, supra note 6.
27
Gas Natural, supra note 22, at 11.
28
Id., at 3
6
So regardless of whether Gas Natural regassified the LNG and sold into the European market, or
sold the LNG on to a terminal in the U.S., it paid the same price to Atlantic LNG.

The fact that the SPA did not provide for a different pricing structure in the event that Gas
Natural resold the LNG to the U.S. market seems to indicate that Atlantic LNG either negotiated
ignorant of the nascent liberalization’s potential effects or substantially underestimated them.
Conceivably, when Atlantic LNG agreed to a resale clause that was not reflected in its
counterpart price clause, it believed that keeping the single European price would benefit it,
because European energy prices had typically proved more expensive than their U.S.
counterparts.29 But between the first delivery in 1999 and the commencement of the arbitration
in 2005, European energy prices were actually lower than those found in the U.S.30 The price
advantage of reselling to the U.S. market for Gas Natural proved so lucrative that it stopped
receiving shipments altogether at its terminal in Spain in 2002 and entered into deal to resell all
of its LNG from Atlantic LNG to New England until at least 2009.31

Gas Natural, by fortune or incredible foresight, found itself in a position to make a sizeable profit
by reselling LNG in the North American market. While it purchased LNG from Trinidad at
depressed European prices, it resold the same LNG for a marked profit in New England. Gas
Natural’s increased earnings from the resale prompted Atlantic LNG to call upon the SPA’s price
renegotiation clause to rectify a situation under which Gas Natural made a significant amount of
money by selling Atlantic LNG’s production at a large profit while Atlantic LNG realized none
of the benefit from that resale.

Chapter 4: The Price-Renegotiation Clause

Thanks to Atlantic LNG’s litigious attack against the final arbitral award, LNG price-
renegotiation clauses can be examined for the first time. Normally, price-renegotiation clauses
should contain three elements; a conditions precedent clause that outlines what circumstances
allow for a party to request renegotiation, an arbitration clause that details the procedure by
which the parties shall proceed if renegotiations fail, and a clause that limits the available

29
Id., at 12
30
Id, at 11.
31
Id., at 4.

7
remedies that an arbitrator might apply in an arbitration. The conditions precedent clause lined
out in Article 8.5(a) of the SPA relates:

If at any time either Party considers that economic circumstances in Spain beyond the
control of the Parties, while exercising due diligence, have substantially changed as
compared to what it reasonably expected when entering into this Contract or, after the
first Contract Price revision under this Article 8.5, at the time of the latest Contract Price
revision under this Article 8.5, and the Contract Price resulting from application of the
formula set forth in Article 8.1 does not reflect the value of Natural Gas in the Buyer’s
end user market, then such Party may, by notifying the other Party in writing and giving
with such notice information supporting its belief, request that the Parties should
forthwith enter into negotiations to determine whether or not such changed circumstances
exist and justify a revision of the Contract Price provisions and, if so, to seek agreement
on a fair and equitable revision of the above-mentioned Contract Price provisions in
accordance with the remaining provisions of this Article 8.5.32

Three common types of conditions precedent exist, scheduled, subjective-event, and objective-
event.33 The SPA’s used a subjective-event condition precedent. Subjective and objective-event
conditions precedent trigger the ability to renegotiate based on the occurrence of contractually
defined events.34 In the case of subjective-event conditions precedent, the event is defined by a
specific measure, but rather by a material change in circumstances35 outlined as in the above
SPA; the substantial change in economic circumstances in Spain. Objective-events, on the other
hand, are defined by a clear measure such as rate of return or price indices.36 Notably, the
present SPA’s subjective-event conditions precedent clause only refers to market conditions in
Spain, and not the prevailing situation in the possible resale market of New England.

32
Id., at 3.
33
Christian Petersen, Gas Natural Aprovisionamientos, SDG, S.A. v. Atlantic LNG Company of Trinidad and
Tobago and Price Reopener Clauses in an Uncertain Environment for LNG Pricing, P AUL HASTINGS C LIENT
ALERT (2009), http://www.paulhastings.com/assets/publications/1226.pdf.
34
Id.
35
Id.
36
Id.
8
On 21 July 2005, Atlantic LNG activated the price-renegotiation clause by citing decreasing
Spanish energy prices due to the market liberalization. Gas Natural, having enjoyed the profits
of resale, proved understandably reluctant to diminish their earning. Atlantic obviously sought
to modify the pricing structure to receive some pass-through benefit of the New England resale.

Unsurprisingly given their respective positions, the parties found a compromise unworkable, and
Atlantic, under the arbitral clause Article 8.5(f), began the arbitration process in New York on 21
October 2005.37 The parties then waited eight months to have an initial conference on 26 July
2006 and then commenced arbitral hearings nearly a year later in April of 2007.38 Seven months
after the hearings, the arbitral tribunal submitted an initial award on 17 January 2008, and a
corrected and clarified award on 27 March 2008.39

In that award, the tribunal first decided that Atlantic LNG’s request for a price-renegotiation had
met the requirements of Article 8.5(a). Interestingly in making that first determination, the
tribunal referred to the “buyer’s end market” as both Spain and New England. At first glance, it
seems odd that the tribunal would utilize the secondary “buyer’s end user market” condition
precedent to conclude that the necessary requirement was met when the change in economic
conditions in Spain “beyond what the control of the parties” would have seemed to suffice. The
subsequent decision of the tribunal, though, makes their initial reasoning clear. To rectify the
discrepancy between the price clause only based on European conditions and the resale clause,
the arbitral tribunal revised the pricing mechanism in two parts. First they adjusted the original
base price40 and then added a second price adjustment mechanism that allowed Atlantic LNG to
realize a larger percentage of Gas Natural’s New England resale.41

On first read, the tribunal seems to have granted what Atlantic LNG wanted; a price mechanism
that recognized and remunerated Atlantic LNG when Gas Natural sold to into the New England
market. It seems perplexing then that Atlantic LNG was the party to challenge the arbitral award
in court. Unexpectedly, however, the new pricing mechanism, retroactively instituted by the

37
Gas Natural, supra note 22, at 4.
38
Id., at 4.
39
Id., at 5.
40
Id.
41
Id.
9
tribunal to 21 April 2005, the date on which Atlantic LNG requested price-renegotiation,42
actually required Atlantic LNG to pay Gas Natural $70 million.43 That price discrepancy was
owed primarily to the second transformational characteristic of the Atlantic Basin market; shale-
gas production in the U.S. had recently increased and had decreased the price of LNG in New
England.44

Atlantic LNG, obviously disappointed with the result, proceeded to challenge the arbitral award
in U.S. federal court in New York. The basis for its challenge turned on whether or not the
arbitral tribunal had exceeded its authority in creating a dual-pricing system, which was beyond
what both the parties had considered in their renegotiations. At this point, with arbitral awards
exceedingly difficult to overturn, a glaring deficiency in the SPA’s price-renegotiation clause
becomes apparent.

As previously mentioned, price-renegotiation clauses should contain three parts, conditions

precedent, arbitral procedure, and limits on the arbitrators’ authority. The present SPA,
unhappily for Atlantic LNG, seemingly contained no such limitation on the arbitrators’ authority
to grant any type of award. Precisely because arbitral awards are nearly impossible to overturn
under both U.S.45 and international law,46 and tribunals, by default, are presumed to possess the
legal power to decide almost any case and offer almost any award,47 companies must include
limits on arbitral power in their price-renegotiation clause to avoid unexpected and costly results.
The failure to do so in this case only led to a bad result for Atlantic, and further litigation after
the arbitration.

42
Id., at 6.
43
Id.
44
Id. at 5.
45
Id., at 7-11.
46
Id.
47
Id.
10
Chapter 5: Conclusions
The changing European energy market unmasked the two weaknesses of the Gas Natural-
Atlantic LNG SPA; a price mechanism that did not account for the New England resale, and a
price-renegotiation clause that placed no limits on arbitral power. Instead of anticipating that
Gas Natural would exercise its right to resell into New England, Atlantic LNG based its pricing
mechanism solely on the European market, even in the face of coming liberalization. That
limited price mechanism caused Atlantic LNG to seek renegotiation to ameliorate a situation it
considered to be unacceptable. As a direct result of seeking to fix the pricing structure,
however, Atlantic LNG also had to pay $70 million to Gas Natural, because of another flaw in
the SPA, the failure to add a limit on the arbitral tribunal’s power.

Perhaps Atlantic LNG was a victim of a perfect storm—bad European prices, and two bad
clauses that conspired to disadvantage it—but the entire point of drafting contingencies into
contracts is to allow for companies to react to changing circumstances without incurring great
costs or liabilities. While there remains no one-size-fits-all approach to drafting price clause,
producers, when negotiating their SPAs, should endeavor to bind their price interest with that of
the buyer; if the price that the buyer receives for the product increases, so should the price that
the producer receives. Bound price interests synchronize one of the most important concerns for
both producers and buyers and helps create a sustainable relationship. Gas Natural and Atlantic
LNG have proceeded since 2008 under the dual-pricing system imposed by the arbitral tribunal.
Under that pricing scheme, both parties have a bound interest in where the product is sold, and
accordingly, can face the pressures of European liberalization, and now the shale-gas revolution.

Similarly, producers would prove wise in limiting the scope of what arbitral tribunals can award
under the price-renegotiation clause. Arbitral tribunals, just like judges, have the authority to
award anything that is not contrary to law. Reason dictates, however, that as arbitral tribunals,
unlike judges, can be bound by rules and procedures in the SPA, that the parties should include
limitations on their ability to create awards that are not in keeping with the parties’ interests.

Moving forward, the Atlantic Basin market for LNG will continue to prove challenging. For
different reasons, the largest markets on both sides of the Atlantic are driving down energy
prices, which has a direct effect on the price of LNG. While SPA drafting cannot anticipatorily
11
solve all problems, the pricing problems highlighted by the Atlantic LNG-Gas Natural dispute
can be easily solved, and in doing so make producers more ready to face the transformational
forces of the Atlantic Basin market.

12
 Reference List
PRIMARY SOURCES

Cases

Gas Natural Aprovisionamientos, SDG, S.A. v. Atlantic LNG Company of Trinidad and
Tobago in the United States District Court for the Southern District of New York (2008 WL
4344525 (S.D.N.Y.).

SECONDARY SOURCES

Books

Brenda Shaffer, ENERGY POLITICS (University of Pennsylvania Press 2009).

EDWARD B. FLOWERS, U.S. UTILITY MERGERS AND THE RESTRUCTURING OF THE NEW
GLOBAL POWER INDUSTRY 86 (Greenwood Publishing Group 1998).

Journals

A. Midttun & S. Thomas, Theoretical Ambiguity and the Weight of Historical Heritage: A
Comparative Study of the British and Norwegian Electricity Liberalization 26 ENERGY POLICY
179 (1998).

Claudia Ines Vasquez Josse & Anne Neumann, Transatlantic Natural Gas Price and Oil Price
Relationships-An Empirical Analysis, 61 SERIE R ECHERCHE ECOLE DU PETROLE ET DES
MOTEURS INSTITUTE FRANCAIS DU PETROLE 1 (2006).

David M. Newbery, Regulatory Challenges to European Electricity Liberalization 9 SWEDISH

ECONOMIC POLICY REVIEW 9 (2002).

David MG Newbery, Electricity Liberalization in Britain: The Quest for a Satisfactory

Wholesale Market Design 26 ENERGY J 43 (2005).

OTHER

Internet
13
A Liquid Market, THE ECONOMIST (14 July 2012), http://www.economist.com/node/21558456.

Christian Petersen, Gas Natural Aprovisionamientos, SDG, S.A. v. Atlantic LNG Company of
Trinidad and Tobago and Price Reopener Clauses in an Uncertain Environment for LNG
Pricing, PAUL HASTINGS CLIENT ALERT (2009),
http://www.paulhastings.com/assets/publications/1226.pdf.

Damon Evans, Asia Makes a Splash, PETROLEUM ECONOMIST (3 January 2013),

http://www.petroleum-economist.com/Article/3136696/Search/Asia-makes-a-
splash.html?Keywords=korea+lng&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)
&Brand=PE&tabSelected=True.

Damon Evans, Total Make Papua New Guinea Play, PETROLEUM ECONOMIST (11 October
2012), http://www.petroleum-economist.com/Article/3101287/Search/Total-makes-Papua-New-
Guinea-
play.html?Keywords=japan+png&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)&
Brand=PE&tabSelected=True.

Helen Robertson, Japan’s Economy in Crisis as LNG Imports Soar, PETROLEUM ECONOMIST (7
December 2012), http://www.petroleum-economist.com/Article/3128376/Search/Japans-
economy-in-crisis-as-LNG-imports-
soar.html?Keywords=japan+lng&OrderType=1&PartialFields=(CATEGORYIDS%3a11654)&B
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Robert J. Samuelson, Don’t Kill the Shale-Gas Boom, THE WASHINGTON POST (23 December
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