Lloyd's Maritime and Commercial Law Quarterly
LEGAL PROBLEMS ARISING FROM THE TRANSPORT OF LIQUEFIED NATURAL GAS
This was the topic for discussion at the conference organised by the Institute of International Law of Transport, held at Deauville on Apr. 17-19. The papers presented dealt with various important aspects of the transport of liquefied natural gas
(
LNG
)
such as the legal status of the terminals, the building contracts, the affreightment and the finance of LNG. A certain amount of discussion followed the presentation of these papers and centred on the safety requirements and the Inter-Governmental Maritime Consultative Organisation
(
IMCO) Code for liquefied gas carriers.
Mr. F. Marie, of Gaz de France, read a paper on the “Legal Problems Associated with LNG Terminals”. He mentioned that in France the LNG terminals are exploited by Gaz de France which is a public corporation of an industrial and commercial character, set up by the law of Apr. 8, 1946, which nationalised electricity and gas in France. According to this law, Gaz de France has the monopoly of importing, carrying and distributing the gas. There are two LNG terminals in France, one in Le Havre and the other in Fos (near Marseille). The author then discussed the following two points:
(i) the legal regime of the land used as a terminal; and
(ii) the legal regime of the construction of the terminal.
On the first point, he mentioned that the land could be owned by the operator of the terminal, or it could be part of the port. This would affect the terms of the relationship with the authorities, the financing arrangement for the occupation, the grounds for withdrawal, etc.
The legal regime of the construction must be defined because it would assist in determining the role of the operator and that of the port authority during the operation of the terminal.
Dr. S. Mankabady, principal lecturer and consultant in maritime law at Liverpool, started by saying that the market of liquefied petroleum gas (LPG) is quite different from LNG. The former has a longer history and has developed a chartering market along lines familiar to operators in the tanker trade. The latter has not yet created a recognisable shipping market. The author mentioned that there are four main factors which affect the terms of the contract of affreightment.
- (1) The carriage of LNG requires enormous financial resources to build the ship and the terminals. These resources are usually beyond the capacity of many shipowners.
- (2) Governments or their agents are directly or indirectly concerned with the contract of LNG in order to ensure the regularity of the supply of gas.
- (3) The contract of affreightment would establish a rather broad relationship between the parties.
- (4) The kind of disputes which may arise under this contract go far beyond those which were familiar in the past.
The author then discussed the terms to be found in the charter-party for the carriage of LNG. He mentioned that some of the clauses which are used for the carriage of crude oil may appear with slight amendments in the charter-party form for LNG.
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