Methodology and Specifications Guide

Version: 1.1
Last Updated: October 2019
Effective from: 11th of October 2019

LNG Freight Methodology:

Submitted rates should be provided on a round trip basis and should incorporate any positioning/repositioning assumptions. Rates should reflect a forward view of where the spot market will price for the relevant month/period. Preference should be given to normalised confirmed transactions.

2 Spot Contracts, 2 Front Month Contracts and 2 Forward Assessments:

  • Spot (SparkS):
    • Spark30S Atlantic 160 TFDE
    • Spark25S Pacific 160 TFDE
  • Front Month (SparkF):
    • Spark30F Atlantic 160 TFDE
    • Spark25F Pacific 160 TFDE
  • Forwards (SparkFo):
    • Spark30 Atlantic 160 TFDE
    • Spark25 Pacific 160 TFDE

Contract Assumptions:

  • Hire Calculation ($/day):

    • Vessel Type: 160,000 m3 TFDE
    • Duration: 25 days (Pacific) or 30 days (Atlantic)
    • Delivery Location: Cold delivery at load port
    • Ballast Bonus: 100% fuel (LNG) and hire back to load port
    • Vessel Age: Max 20 years old
  • $/MMBtu Calculation:

    • Discharge volume: 3,600,000 MMBtu for 160,000m3
    • Speed: 17 knots
    • Fuel Strategy: gas mode on laden and ballast at Boil Off Rate
    • Boil Off Rate: 0.1% of cargo tanks at 98.5% capacity for 160,000m3 TFDEs
    • LNG Price: based on latest LNG prices into JKTC region
    • Port costs (in USD and revised on a periodic basis):
      • Sabine Pass: $193,000
      • Gate: $106,714
      • NWS: $146,663
      • Tianjin: $208,000
  • Route Assumptions:

    • Atlantic: Sabine Pass - Gate (25 days round trip)
    • Pacific: NWS - Tianjin (19 days round trip)
    • Load/Discharge Duration: 1 day load / 1 day discharge
    • Flex Days: 4 (Pacific) and 3 (Atlantic)
  • Inputs and Settlement Mechanism:

    • Rate: $USD/day based on delivery in the relevant month
    • Spark25S and Spark30S Prompt Assessment:

      • Spot Period: vessel delivery 15-45 days forward from the date of submission.
      • Spot Frequency: 2 times per week (Tuesday and Friday between 0800-1000 GMT).
      • Spot Settlement: weekly average of assessed prices in relevant week (Mon-Fri).
    • Spark25F and Spark30F Front Month Assessment:

      • Assessment Period: 16th Day of M-2 until 15th Day of M-1.
      • Vessel Laycan: assumes vessel delivery in the front month.
      • Front Month Assessment Frequency: 2 times per week (Tuesday and Friday between 0800-1000 GMT with intention to become daily).
      • Front Month Settlement: average of submissions between 16th Day of M-2 until 15th Day of M-1 (inclusive).
      • Front Month Rolling: front month rolls at the end of the 15th Day of M-1.
    • Spark25/30 Forward Contracts:

      • Forward Curve: 12 months (M+2 to M+12)
      • Forward Curve Frequency: 1 time per week (Tuesday 0800-1000 GMT)
      • Rolling: M+2 to M+12 roll in line with SparkF rolling mechanism.

Benchmarking:

As submission numbers increase, we will provide you with the ability to benchmark versus other categories of market participants. Anonymity is key so although we are starting with broad definitions, the more submissions we receive, the more granular this will become.

Submitter Categories (subject to change):

  • Brokers: neutral assessments forming the Spark Price assessment.
  • Portfolio Players: LNG market players with global portfolios and capability to charter and sub-charter LNG vessels.

Examples of how to apply the Spark Methodology:

2 hypothetical spot market situations:

One-way economics (NWS-Tianjin):

  • Rate: $80,000/day
  • Ballast Bonus: Fuel Only
  • Positioning/repositioning: Not applicable

    Spark25 normalised rate: $40,000/day ($80,000 / 2)


Round trip economics (NWS-Tianjin) with 500k lump sum positioning and 300k lump sum repositioning:

  • Rate: $80,000/day
  • Ballast Bonus: 100% fuel and hire to load port
  • Positioning/repositioning: $800,000 (32,000 per day over 25 days for Spark25)

    Spark25 normalised rate: $112,000/day ($80,000 + 32,000)

Examples of how to apply the SparkF Settlement Mechanism:

  • Front Month: December 2019
  • Assessment window opens: 16th October 2019
  • Assessment window closes: 15th November 2019
  • First relevant SparkF assessment window: Friday 18th October 2019.
  • Last relevant SparkF assessment window: Friday 15th November 2019.
  • Settlement Date: 15th November 2019
  • Settlement Mechanism: average of submissions (bi-weekly) between 16th October 2019 and 15th November 2019 (inclusive).