Background: A confidential client was required by the lenders to two of its gas-fired power projects to demonstrate the competitiveness of its LNG supply agreements. Orchid Group was engaged to conduct the study.
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- Orchid was engaged in 2018 to develop an outlook for new LNG contract prices over the next ten years.
- The purpose of the work was to demonstrate to the lenders to client’s power projects that their LNG supply agreements would be competitive over the life of the loan.
- We began by looking at historical supply/demand in LNG markets against evolving long-term contract price trends.
- From there, we developed an outlook for global LNG supply and demand over the next 10 years.
- Against the outlook, we assessed the trend for new project financial investment decisions and challenges facing the development of new projects.
- Finally, we developed an expected price formula outlook for years 1-5 and years 6-10.
- Powerpoint report incorporating historical analysis, the outlook and pricing expectations
- Report was delivered to client’s lenders to satisfy obligations under the term loan agreements