Liquefied natural gas (LNG) buyers with long-term contracts are asking their suppliers for extra volumes of the super-chilled fuel pegged to oil prices which are currently much lower than spot prices, several trade and industry sources told Reuters.
Some have requested to load bigger cargoes bought under their long-term contracts instead of turning to the spot market to buy additional cargoes, or have asked for earlier delivery of the cargoes, the sources said.
Some buyers have requested to exercise a contract clause known as Upward Quality Tolerance , which is typically a flexibility embedded in long-term contracts where buyers are able to request for about 5% to 10% extra volumes, the sources said. Buyers are also requesting for some adjustment to the volume of long-term cargoes being loaded on tankers, with some asking for a bit more to be added.
Last year, when LNG spot prices dropped to below $2 per mmBtu when coronavirus-induced restrictions slammed gas demand globally, buyers had requested for Downward Quantity Tolerance , which allows them to take lower volumes of contracted cargoes.
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