As a general rule, the levy has an element to be paid, regardless of whether the processing service is used or made available, either for previously agreed quantities of gas to be delivered for processing, or for a capacity right in the LNG facility. As a general rule, the paying unit needs a basic cash flow to cover expenses related to the use or availability of the processing service. Processing costs often support project financing for export facilities. Lenders advance certain aspects of the royalty structure to ensure that credit risk is properly placed and that the flow of payment is constant throughout the term of the financing. The royalty structure will be associated with many other provisions of a toll contract. Is the levy profit-oriented or not? Will capital expenditures be part of the royalty? Are operating costs in variable and fixed categorizations? Should all or part of the fee be paid if treatment services are never available? These are all critical issues that should be decided in the decision on the structure of the project. The royalty structure can have an impact on the accountability regime, funding and the relationship between project participants. While lenders may require different forms of security, guaranteeing the source of revenue from the sale of LNG and by-products is essential not only for banks, but also for other project participants. It is typical that a loyalty agreement (often offshore, for investments in developing countries) is created and a paying body is designated.
This gives banks and project participants a guarantee on revenues. The use of a secure trust contract gives banks the comfort of having control of the project`s debt proceeds, (ii) the toll company guarantees that their toll is paid, and (iii) project participants ensure that payment is made for the liability of a toll company. HOUSTON INTERVIEW (ICIS): U.S. supplier Sempra, which is currently building The Cameron LNG export plant in Louisiana, is moving away from the initial toll model from its first installment of contract to a free onboard model (FOB) or an ex-ship-delivered (DES) model, said the new president of its LNG division, Justin Bird. „We spent a lot of time in Sempra thinking about this transition [away from the toll model],“ he said. Bird stated that the energia Costa Azul agreements, Sempra`s liquefaction extension project in Ensenada, Mexico, and Port Arthur are based on the sales and sales contract (SPA) model and not on toll prices.