LNG Ship Chartering Basics

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Questions and Answers

Which of these costs are typically paid by the charterer in a voyage charter?

  • Cargo Handling Costs (correct)
  • Fuel Costs (correct)
  • Crew Costs
  • Port Charges (correct)

A voyage charter allows for the use of multiple ships for a single voyage.

False (B)

What is the term used to describe the agreed-upon time for loading and unloading cargo in a voyage charter?

Laytime

In a [BLANK] charter, the owner receives a regular payment for hire but is not responsible for the ship's goods or transactions.

<p>bareboat</p> Signup and view all the answers

Match the following charter types with their key characteristics:

<p>Voyage Charter = A single voyage for specific cargo, with laytime and demurrage provisions. Time Charter = More than one vessel can be used, no laytime or demurrage, but a fixed daily hire fee. Bareboat Charter = A long-term lease with full control of the vessel for the lessee, while the owner receives a fixed hire payment.</p> Signup and view all the answers

What is the initial stage of a commercial negotiation in the simplified process outlined in the text?

<p>Initial Offer/Indication (D)</p> Signup and view all the answers

Indications in the initial stage of negotiation are legally binding.

<p>False (B)</p> Signup and view all the answers

The simplified process involves a series of ______ and counter-offers leading to a firm offer.

<p>indications</p> Signup and view all the answers

What are the terms commonly referred to as 'main terms' in a commercial negotiation?

<p>Charter, Owner, Vessel, Delivery, Laycan, Duration, Rate, (Brokerage)</p> Signup and view all the answers

Match the following terms with their correct descriptions:

<p>Time Charter = The owner hires the vessel to the charterer for a specified period of time. Subject = A conditional agreement where the parties agree to finalize a deal based on certain conditions. Firm Offer = A legally binding offer, indicating the party is committed to the terms specified. Main Terms Sheet = A document that outlines the key items of a commercial negotiation, often used in the initial stages.</p> Signup and view all the answers

The initial offer/indication in the simplified process must be formal and comprehensive, including all details.

<p>False (B)</p> Signup and view all the answers

What stage of the negotiation process sees the vessel being placed 'on subs'?

<p>Soft Counter-agreements (B)</p> Signup and view all the answers

What is the purpose of the Main Terms Sheet in a negotiation?

<p>It outlines the key items of a commercial negotiation, serves as a starting point for discussion, and provides common ground for the parties involved.</p> Signup and view all the answers

Which of the following chartering types is most commonly used for LNG transportation?

<p>Time Charter (B)</p> Signup and view all the answers

Voyage charters are often the preferred choice for LNG transportation.

<p>False (B)</p> Signup and view all the answers

What type of charter involves the hiring of a vessel for a set period, with the charterer choosing the ports and routing?

<p>Time Charter</p> Signup and view all the answers

A ______ agreement is not technically a charter contract but shares similarities with a voyage charter.

<p>Contract of Affreightment (COA)</p> Signup and view all the answers

Match the following types of charters with their primary characteristics:

<p>Voyage Charter = Hiring a vessel for a specific voyage Time Charter = Hiring a vessel for a specific period, with operational control by the charterer Contract of Affreightment (COA) = Agreement for carriage of goods on a specified route for a fixed period</p> Signup and view all the answers

In a time charter, who is responsible for managing the ship's operations?

<p>The ship owner (B)</p> Signup and view all the answers

The Contract of Affreightment (COA) commonly used in LNG transportation.

<p>False (B)</p> Signup and view all the answers

What is a key difference between a voyage charter and a time charter in terms of the specific agreement made?

<p>A voyage charter involves hiring a vessel for a single voyage between two ports, while a time charter involves hiring a vessel for a specific period of time, with the charterer having operational control during this period.</p> Signup and view all the answers

Flashcards

Contract of Affreightment (COA)

A contract where a ship owner agrees to transport goods for a charterer on a specific route and for a specified period of time.

Voyage Charter

A contract where a ship owner hires out a vessel and its crew for a specific voyage between a loading port and a discharge port.

Time Charter

A contract where a charterer hires a vessel for a specific period of time, with the owner managing the ship, but the charterer selecting the ports and routing.

Laytime

The agreed time for loading and unloading cargo in a voyage charter.

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Demurrage

A payment made by the charterer to the owner when the laytime for loading or unloading a ship is exceeded.

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Despatch

A payment made by the owner to the charterer when the laytime for loading or unloading a ship is completed early.

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Bareboat Charter

A long-term lease of a vessel where the lessee (renter) has full control and responsibility, including appointing the captain and crew.

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What is an 'indication' in shipping?

The initial starting point of any commercial negotiation. This document initiates the deal outlining core terms, but is non-binding and subject to changes.

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What is a 'Main Terms sheet' in a time charter party?

The document outlining the key elements of a time charter party contract. It's a non-binding proposal and serves as the initiating point for negotiations. Typically created by a broker and may be shared between interested parties.

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What are the 'main terms' in a time charter negotiation?

The core terms defined in an 'indication' or 'main terms sheet' include: charter, owner, vessel, delivery, laycan, duration, rate and brokerage. The 'main terms' establish the fundamental framework for a potential charter deal.

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What are 'Counter offers' in a commercial negotiation?

Counteroffers are a key component of negotiation. Each party modifies the previous offer until an agreement is reached. It's crucial to keep track of changes made within each counteroffer.

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What are 'Soft agreements' in a time charter negotiation?

These are non-obligatory agreements reached during the negotiation process before a firm offer is made. They signify progress towards a deal.

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What is a 'Firm offer' in a time charter negotiation?

A 'firm offer' is the official, legally binding offer for a time charter agreement. It's a serious commitment with defined terms.

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What is a 'Subjects to' clause in a time charter agreement?

A 'subjects to' clause in a time charter deal means that the agreement is contingent upon certain conditions being met. These conditions need to be satisfied before the contract becomes final.

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What does it mean when a vessel is placed 'on subs'?

When a vessel is placed 'on subs,' it means that the charterer has made an initial agreement to charter the vessel, but it is still subject to final approvals.

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Study Notes

LNG Ship Chartering Basics

  • LNG chartering involves the hiring of an LNG vessel. Estimates are based on current market knowledge, but unforeseen circumstances might affect the market.
  • MB Shipbrokers is not liable for any damages arising from the use of this information.
  • All rights are reserved for any reproduction without written permission from the copyright owner.
  • Quoting is prohibited without written permission.

Types of Charters

  • Voyage Charter: A vessel is hired for a specific voyage (port to port). Ownership manages the ship, and the vessel owner receives payment either per ton or a lump sum. Chartering costs (stevedoring, fuel, and crew) are covered by the ship owner. The agreed laytime for loading and unloading the cargo. If this time is exceeded, the charterer is responsible for demurrage. Conversely, if the laytime is saved, the owner may have to pay despatch to the charterer.

  • Time Charter: A vessel is hired for a set period; the charterer manages the vessel's operation, including port calls, routing decisions, and full operational control. The charterer is responsible for fuel, port charges, cargo handling, commissions, and daily hire fees.

  • Contract of Affreightment (COA): While similar to a voyage charter, it's not strictly a charter contract. The owner agrees to transport goods over a specific period, on a specified route. No laytime or demurrage applies.

Bareboat Charter

  • A bareboat charter is a lease for a fixed period. The lessor receives regular payments. The lessee controls the vessel, including master and crew. The Barecon/89 is a standard form for this type of charter.

Simplified Commercial Negotiations

  • The process involves initial offers, counteroffers, soft agreements, and a firm offer.
  • Parties discuss the time charter.
  • Subjects are reviewed and approved.
  • Vessel terms (e.g., conditions) are specified.

Indications/Non-Binding Discussions

  • Indications/KTS are starting points for a commercial agreement, typically containing key terms and details.
  • Key information is needed from parties: Ownership, ship manager, vessel, specification, laycan, delivery location, condition, notices, etc.
  • It is important to track changes in the negotiations.

Key Differences Between Indications and Offers

  • Indications are specific to one counterparty.
  • They have deadlines and validity periods.
  • Offers have subject deadlines.

Subjects/Recaps

  • Common subjects are negotiated, often regarding vessel specifications, key terms, and conditions agreed upon prior to formal charter.

Subjects/Deadlines/Clean Fixing

  • Topics needing clarification before agreements can be finalized.
  • Subject examples: compatibility, dates, procedures, and required agreements.
  • Vessel needs to be ready for operational requirements.
  • Potential disputes for cargo-related or logistical issues are addressed.

Form B- Particulars of Vessel

  • Vessels' specifications are recorded. Owners will likely state the vessel's name, builder, year-built, IMO number, and additional relevant details.

Form B- Fuel Oil (Equivalent) Consumption

  • Charts/calculations on speed, fuel consumption (laded/ballast), maximum/trial speed, service speed, and details related to port operations. Examples of fuel consumption rates for inert gas generators are also given.

Form B- Cargo Tanks

  • Container/tank volume calculations for different aspects of loading and unloading. Details on cargo tank capacities.

Form B- Compatibility

  • List of compatible terminals for the ship. This is a crucial aspect to cover when agreeing on loading and unloading destinations/procedures.

Take-Away Questions

  • Questions concerning the process, key terms used, subjects, and details relevant to the specific example of the LNG vessel chartering.

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