Jurisdiction(s):
United Kingdom

Key definition

LNG definition

What does LNG mean? In energy, shipping and infrastructure practice, LNG means natural gas liquefied for storage and marine transport. It is processed gas, primarily methane with small amounts of other hydrocarbons and inert gases, cooled to about −162°C to form a liquid at or near atmospheric pressure. It is shipped by LNG carriers to import terminals for storage and regasification into the gas grid, or supplied as LNG to end users. The term is descriptive rather than a single statutory definition in the UK or Ireland. Where precision is needed, contracts and technical specifications define LNG by composition and quality parameters (e.g. heating...

Drafting take-or-pay clauses in gas and LNG SPAs: key features, scheduling, quantity and price mechanics, adjustments, example clauses, and comparison with take-and-pay

Published by a LexisNexis Energy expert

Practice notes

This Practice Note reviews the typical elements of take-or-pay provisions and includes illustrative clause wording. It also addresses the difference between take-or-pay provisions and take-and-pay provisions. For a primer on take-or-pay clauses within the energy industry, together with the recurring regulatory and competition law considerations, see Practice Note: An introduction to EU law and competition law issues for take-or-pay clauses in energy contracts. For further insight into the English courts’ approach to take-or-pay provisions, and a detailed analysis of take-or-pay clauses alongside the rule on penalties, see Practice Note: Take-or-pay clauses in energy contracts: the rule on penalties.

Common features of take-or-pay clauses

This section concentrates on take-or-pay terms in gas and LNG SPAs. Comparable characteristics are found in take-or-pay mechanisms across other energy-sector agreements. For additional background, see Practice Note: An Introduction to Oil & Gas Sales and Trading.

Scheduling

Take-or-pay obligations can be structured to apply over a contract year (which is more typical in LNG SPAs), yet they can equally be set to bite on a daily or monthly horizon (as frequently seen in pipeline deals). LNG SPAs are often framed annually, whereas pipeline arrangements may instead stipulate take-or-pay on a per-day or month in practice where appropriate...

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Web page updated on 21/05/2026

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