SERVICE AGREEMENT UNDER RATE SCHEDULE LNG-3
Exhibit 10.C
Service Agreement SLNG -25
UNDER RATE SCHEDULE LNG-3
THIS AGREEMENT entered into this 5th day o f October 2007 by and between Southern LNG Inc. (Southern LNG) and Shell NA LNG LLC (Customer).
WITNESSETH:
WHEREAS, Southern LNG has undertaken to provide service for the firm receipt, storage, vaporization of LNG and delivery of vaporized LNG (Terminal Service) under Part 284 of the Federal Energy Regulatory Commission’s (Commission) Regulations at its Xxxx Island LNG Terminal in Chatham County, Georgia ("Xxxx Island Terminal”);
WHEREAS, Customer has requested Terminal Service pursuant to rate Schedule LNG-3 ("the Firm Rate Schedule") and has submitted to southern LNG a request for such service in compliance with section 7 of the Firs Rate Schedule;
WHEREAS, Southern LNG agrees to render Terminal Service to Customer pursuant to the provisions of the Firm Rate Schedule, this Agreement, and the Commission’s Regulations; and
WHEREAS, Customer may acquire, from time to time, released firm capacity under Section 16 of the General Terms and Conditions (GT&C) of Company’s FERC Gas Tariff (tariff).
ARTICLE I
QUANTITY OF SERVICE
Subject to the terms and provisions of the agreement; and the Firm Rate Schedule, and the GT&C of Southern LNG's Tariff, as amended from time to time, Southern LNG agrees to receive LNG from Customer pursuant to Article II, store LNG, and deliver vaporized LNG to Customer or for Customer’s account, as follows:
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1.1.1.1
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Southern LNG shall store LNG for Customer’s account up to the Maximum Storage Quantity (MSQ) set forth on Exhibit A hereto and any effective addendum.
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1.2
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Southern LNG shall deliver a volume of vaporized LNG net of fuel, as provided in GT&C § 24.1, to Customer at the Delivery Point. Southern LNG's obligation to withdraw LNG from Storage for delivery the Delivery Point on any day is limited to the available Maximum Daily Vaporization Quantity (MDVQ) specified on Exhibit A or any effective Addendum hereto and Shipper's LNG Balance, as defined in the Firm Rate Schedule.
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1.3
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If Customer is the successful bidder on released firm capacity under Section 16 of Southern LNG’s GT&C, Southern LNG will promptly finalize by means of SoNet the appropriate Addendum to this Agreement in the format attached hereto. Upon the finalization of an Addendum, subject to the terms, conditions and limitation hereof and the Firm Rate Schedule, Southern LNG agrees to provide the released Firm Service to Customer under the Firm Rate Schedule, the GT&C thereto, and this Agreement.
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ARTICLE II
CONDITIONS OF SERVICE
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2.1
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It is recognized that the Terminal Service hereunder is provided on a firm basis pursuant to, in accordance with and subject to the provisions of the Firm Rate Schedule, and the GT&C thereto, which are contained in Southern LNG’s FERC Gas Tariff, as in effect from time to time, and which are hereby incorporated by reference. In the event of any conflict between this Agreement and the Firm Rate Schedule, the terms of the Agreement shall govern as to the point of conflict. Any limitation of Terminal Service hereunder shall be in accordance with the priorities set out in Southern LNG’s Tariff.
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2.2
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This Agreement shall be subject to all provisions of the GT&C specifically made applicable to the Firm Rate Schedule, as such conditions may be revised from time to time. Unless Customer requests otherwise, Southern LNG shall provide to customer the filings Southern LNG makes at the Commission of such provisions of the GT&C or other matters relating to the Firm Rate Schedule.
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2.3
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Southern LNG shall have the right to discontinue service under this Agreement in accordance with Section 13.3 of the GT&C contained in Southern LNG’s Tariff.
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2.4
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The Parties hereto agree that neither party shall be liable to the other party for any special, indirect, or consequential damages (including, without limitation, loss of profits, business interruptions, or demurrage) arising out of or in any manner related to this Agreement or the Terminal Service provided hereunder.
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2.5
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This Agreement is subject to the provision of Part 284 of the Commission’s Regulations. Upon termination of this Agreement, Southern LNG and Customer shall be relieved of further obligation to the other party except to complete the Terminal Service underway on the day of termination, to comply with the provisions of Section 10 of Rate Schedule LNG-1 with respect to any of Customer’s LNG upon termination of this Agreement, to render reports, to make payment for service rendered and to release and indemnify the other party as provided in the tariff.
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2.6
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If requested by Customer, deliveries shall occur at a pressure not less than the Terminal Outlet Pressure shown on Exhibit “A” hereto at the Xxxx Island Terminal outlet.
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ARTICLE III
NOTICES
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3.1
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Notices hereunder shall be given pursuant to the provisions of Section 14 of the GT&C to the respective party at the applicable address, telephone number, facsimile machine number or e-mail addresses stated below or such other addresses, telephone numbers, facsimile machine numbers or e-mails address as the parties shall respectively hereafter designate in writing from time to time:
Company: Notices and General Correspondence
Southern LNG Inc.
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Customer Services Department
Telephone No.: (000) 000-0000
Facsimile Machine No.: (000) 000-0000
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Vessel Scheduling and Arrival Notices
E-mail Address: XxxxXxxxxxxxxx@XxXxxx.xxx
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Dispatching Notices – Nominations/Confirmations
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Name/Dept: Customer Service Department
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Telephone No.: (000) 000-0000
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Facsimile Machine No.: (000) 000-0000
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Dispatching Notices – OFOs/Capacity Allocation
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Name/Dept: Customer Service Department
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Telephone No.: (000) 000-0000
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Facsimile Machine No.: (000) 000-0000
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Emergencies and 24-Hour Dispatching Contact
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Name: Control Room
Telephone No.: (000) 000-0000
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Facsimile Machine No.:
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Facsimile Machine No.: (000) 000-0000
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(1)
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Alternative Contacts:
________________________________
________________________________
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(2)
Customer:
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Alternative Contacts:
________________________________
________________________________
E-Mail Addresses: (1) XxxxXxxxxxxxxx@XxXxxx.xxx
(2) ________________________
Text Pager ID: ______________________________________
Payments
Southern LNG Inc.
Xxxx Xxxxxx Xxx 000000
00 Xxxxx
Xxxxxxx, Xxxxxxx 00000
Notices and General Correspondence
Director – Xxxx Island
41st Floor, 000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Facsimile Machine No.: (000) 000-0000
Dispatching Notices – Nomination/Confirmations
Name/Dept: Director – Xxxx Island
Telephone No.: 000-000-0000
Facsimile Machine No.: 000-000-0000
Email: Xxxxxxx.Xxxxxxxx@xxxxx.xxx
Dispatching Notices – OFOs/Capacity Allocations
Name/Dept: Director – Xxxx Island
Telephone No.: 000-000-0000
Facsimile Machine No.: 000-000-0000
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(1)
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Alternative Contacts:
Xxxxxxx Xxxxxxx
Telephone No.: 000-000-0000
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(2)
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Alternative Contacts:
Xxx Xxxx
Telephone No.: 000-000-0000
E-Mail Addresses: (1) Xxxxxxx.Xxxxxxx@xxxxx.xxx
(2) xxx.Xxxx@xxxxx.xxx
Text Pager ID: ___________________________________
Invoices
Director – Xxxx Island
Shell NA LNG LLC
00xx Xxxxx, 000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000
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ARTICLE IV
TERM
This Agreement shall be effective as of the date hereof and service under this Agreement shall commence on the date of the vaporization facilities associated with the Xxxx III Expansion Project are placed in service and shall remain in full force and effect until the twenty-fifth (25th) anniversary of the date of the LNG storage facilities associated with Phase A of the Xxxx III Expansion Project were placed in-service (“Primary Term”), and every two (2) years thereafter (Evergreen Extension”), subject to termination by either party upon written notice to the other at least two (2) years’ prior to the end of the Primary Term or Evergreen Extension thereto; provided, however, Customer may elect to extend the Primary Term for an additional five (5) years (“primary Term Extension”) if it gives written notice to Southern LNG prior to Southern LNG posting the capacity for bid under Section 15 of the General Terms and Conditions to Southern LNG’s Tariff, but in no event later than the end of the Primary Term in the event Southern LNG does not make such posting.
ARTICLE V
REMUNERATION
1. Customer shall pay Southern LNG for service rendered hereunder in accordance with the Agreement, including any discounted or negotiated rate exhibit applicable hereto, the Firm Rate Scheduled and the applicable provisions of the GT&C of Sothern LNG’s Tariff as filed with the Commission, and as the same may be amended or superseded from time to time. Such Rate Schedule and GT&C are by this reference made a part hereof.
2. Unless agreed otherwise in writing, Southern LNG shall have the unilateral right to propose, file, and make effective with the Commission, or other regulatory authority having jurisdiction, changes and revision to the rates and rate design propose pursuant to Section 4 of the Natural Gas Act, or to propose, file, and make effective superseding rates or rate schedules, for the purposes of changing the rates, charges, rate design, terms, and conditions fo service and other provisions thereof effective as to Customer; provided, however, that the (i) firm character of service, (ii) term of agreement (as set forth in Article III abover), (iii) quantities, and (iv) point of receipt and delivery shall not be subject to unilateral change under this paragraph. Unless agreed otherwise in writing, Customer shall have the right to file with the Commission or other regulatory authority in opposition to any such filings or proposals by Southern LNG. This agreement does not, however, alter, pre-existing rights under Section 5 of the Natural Gas Act.
ARTICLE VI
MISCELLANEOUS
1. The subject headings of the Articles of this agreement are inserted for the purpose of convenient reference and are not intended to be a part of this agreement nor to be considered in the interpretation of the same.
2. (If applicable) This agreement supersedes and cancels as of the effective date hereof the following Services Agreements between the parties hereto:
___N/A______________
3. No waiver by either part of any one or more defaults by the other n the performance of any provisions of this agreement shall operate or be construed as a waiver of any future default or defaults, whether of a like or different character.
4. This agreement shall be interpreted, performed, and enforced in accordance with the laws of the State of Georgia, without regard to rules for conflicts of law that would result in the application of other law.
5. This agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns.
6. This agreement (and Southern LNG’s Tariff incorporated herein) constitutes a completely integrated agreement that supersedes all prior or contemporaneous agreements and negotiations. No amendment will modify the terms of this agreement unless executed by both Customer and Southern LNG.
7. This Agreement is subject to all present and future valid laws and orders, rules, and regulations of any regulatory body of the federal and state government having or asserting jurisdiction herein. After the execution of this Agreement for firm storage capacity from Southern LNG, each party shall make and diligently prosecute, all necessary filings with federal or other governmental bodies, or both, as may be required for the initiation and continuation of the storage service which is the subject of his Agreement. Each party shall have the right to seek such governmental authorizations, as it deems necessary, including the right to prosecute its request or applications for such authorization the manner it deems appropriate. Upon either part’s requests, the other party shall timely provide or cause to be provided to the requesting party such information and material not within the requesting party’s control and /or possession that may be required for such filings. Each party shall promptly inform the other party of any changes in the representations made by such party herein and/or in the information provided pursuant to this paragraph. Each party shall promptly provide the other party with a copy of all filings, notices, approvals, and authorizations in the course of the prosecution of its filings.
8. The exhibits and any addendum attached to this agreement constitute a part of this Agreement and are incorporated herein.
IN WITNESS WHEREOF, the parties hereto have caused this agreement to be signed and sealed by their respective officers or representatives thereunder duly authorized on any day and year above written.
SOUTHERN LNG INC.
By: /s/ Xxxxxx X. Xxxxxx
Its: Senior Vice President and Chief Commercial Officer
SHELL NA LNG LLC
By: /s/ Xxxxxxx Xxxxxx
Its: Vice President Strategy & Development
EXHIBIT A
Rate MSQ MDVQ Primary PT End PT Term Evergreen Evergreen Term
Storage Point Schedule (Mcf) (1) (Mcf) (2) Term ("PT”) Date Notice Period Notice Outlet
Pressure
LNG-3 Start Date
Southern LNG’s marine 4,220,000 405,000 3/1/2010(3) 9/1/2035(4) 730 days 2 yr 730 days 1200
Terminal facilities located psig
On Xxxx Island in Chatham
County, Georgia
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(1)
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The volume available for receipt by Southern LNG shall be subject to adjustment each day based on Customer’s LNG Balance, as set forth in Rate Schedule LNG-3
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(2)
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The volume available for delivery by Southern LNG may be subject to adjustment each day, as set forth in Rate Schedule LNG-3
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(3)
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The actual Start date of the Primary Term of this agreement shall be the date the vaporization facilities associated with Phase A of the Xxxx III project in docket No. CP06-470 are placed in service.
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(4)
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The actual End Date of the Primary Term of this agreement shall be the twenty fifth (25th) anniversary of the date the storage facilities associated with Phase A of the Xxxx III Project were placed in-service. Customer may elect to extend the Primary Term for an additional five (5) years (“Primary Term Extension”) if it gives written notice to Southern LNG prior to Southern LNG posting the capacity for bid under Section 15 of the General Terms and Conditions of Southern LNG’s Tariff, but in no event later than the end of the Primary Term in the event Southern LNG does not make such posting.
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Effective Date: October 5, 2007
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/s/ Xxxxxxx Xxxxxx
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/s/ Xxxxxx X. Xxxxxx
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SHELL NA LNG LLC
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SOUTHERN LNG INC.
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Vice President Strategy & Development
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Senior Vice President and Chief Commercial Officer
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EXHIBIT B
CUSTOMER’S VESSEL INFORMATION
Customer:__________________________________________________
| LNG Tanker(s) | Register | LNG Cargo | LNG Tanker | ||
| Name(s) | Register | Number | Flag | Capacity (Mcf) | Owner/Operator/Manager |
EXHIBIT F
Negotiated Rate Agreement
This Exhibit F is entered into pursuant to the authorization in Section 25.4 of the General Terms and Conditions of SOUTHERN LNG's FERC Gas Tariff. The negotiated rate set forth under this Exhibit F shall remain in full force and effect for the Primary Term, and, as applicable, the Primary Term Extension of the Service Agreement hereto as described above in Exhibit A.
Customer and Southern LNG hereby agree that the right of first refusal set forth in Section 15 of the General Terms and Conditions of the Tariff does apply to the service subject to this Exhibit F.
Customer agrees to pay a negotiated rate as follows for firm terminal service provided under the terms of this Service Agreement and Rate Schedule LNG-3 of Southern LNG's Tariff:
1.a. During the period from the date that the storage facilities associated with Phase A of the Xxxx III Project are ready for service to the date that the storage facilities associated with Phase B of the Xxxx III Project are ready for service, but in no event later than December 32, 2013, Customer shall pay to Southern LNG a daily rate of $256,373.00, inclusive of any and all commodity charges and surcharges and other charges and fees, except for 1) fuel, 2) XXXX, and 3) any commodity charges applicable to quantities delivered in excess of Customers MDVQ.
1.b. For billing purposes, Customer's reservation charge in a month applicable to the period set forth above in Section 1.a. shall be calculated by using a rate of $0.62 multiplied by the product of Customer's MDVQ and 1.021 and the number of days in the applicable month less the sum of the monthly charges associated with any and all commodity charges and any and all surcharges which shall be billed to Customer at the applicable tariff rate under Rate Schedule LNG-3. In the event of any conflict between this paragraph 1.b and the terms of paragraph 1.a above, the terms of paragraph 1.a shall govern.
2.a. During the period from the Start Date set forth above in Exhibit A to the date that the storage facilities associated with Phase A of the Xxxx III Project are ready for service, Customer shall pay to Southern LNG a daily rate of $171,617, inclusive of any and all commodity charges and surcharges and other charges and fees except for 1) fuel, 2) XXXX, and 3) any commodity charges applicable to quantities delivered in excess of Customer’s MDVQ.
2b. For billing purposes, Customer's reservation charge applicable to the period set forth above in Section 2.a. shall be calculated by using a rate of $0.4150 multiplied by the product of Customer's MDVQ and 1.021 and the number of days in the applicable month less the sum of the monthly charges associated with any and all commodity charges and any and all surcharges which shall be billed to Customer at the applicable tariff rate under Rate Schedule LNG-3. In the event of any conflict between this paragraph 2.b and the terms of paragraph 2.a above, the terms of paragraph 2.a shall govern.
3.a. From the date that the storage facilities associated with Phase B of the Xxxx III Project are ready for service, but in no event later than December 31, 222013, to the end of the Primary Term set forth above in Exhibit "A", Customer shall pay to Southern LNG a daily rate of $246,725, inclusive of any and all commodity charges and surcharges and other charges and fees except for 1) fuel, 2) XXXX, and 3) any commodity charges applicable to quantities delivered in excess of Customer’s MDVQ.
3.b. For billing purposes, Customer's reservation charge set forth above shall be calculated by using a rate of $0.5967 multiplied by the product of Customer's MDVQ and 1.021 and the number of days in the applicable month less the sum of the monthly charges associated with any and all commodity charges and any and all surcharges which shall be billed to Customer at the applicable tariff rate under Rate Schedule LNG-3. In the event of any conflict between this paragraph 3.b and the terms of paragraph 3.a above, the terms of paragraph 3.a shall govern.
4. XXXX and Fuel charges shall be assessed hereunder at the applicable tariff rate under Rate Schedule LNG-3 and shall not be included in the daily rate set forth above in paragraphs 1, 2 or 3.
5. Any charges or surcharges associated with any quantities taken above the applicable MSQ or MDVQ shall be assessed in accordance with Southern LNG's Tariff and not included in the daily rate set forth above in paragraphs 1, 2 or 3.
Customer and Southern LNG hereby agree that, notwithstanding Customer's selection of the Buyout Election under Section 4.5.2 of Rate Schedule LNG-3 for the MDQ and MDVQ to which this Exhibit F applies, during the period of an SLNG Force Majeure (as defined in Section 4.5.1(a)(ii) of Rate Schedule LNG-3), this negotiated rate shall be credited in accordance with the terms of Section 4.5.1 of Rate Schedule LNG-3 in the event Customer has not terminated this Service Agreement under its Buyout Election pursuant to 8.6(b)(1)(C) or 8.6(b)(2)(B) of the General Terms and Conditions to SLNG's Tariff.
Customer and Southern LNG agree that neither Party shall take any steps nor actions during the term of this Negotiated Rate Agreement to change, adjust or terminate this Negotiated Rate. Except as provided herein, Customer shall have the right to intervene, protest and fully participate in proceedings involving the recourse rates, Tariff and services of Company.
Customer shall not, directly or indirectly, take a position in a Company proceeding at FERC that any revenue generated from the Negotiated Rate hereunder in excess of the recourse rate should be either credited to Company’s recourse rate shippers under any rate schedule.
In the event of a material breach by Customer of the covenants above in a FERC proceeding dealing exclusively with Company, Customer may be responsible for consequential or special damages up to the lost revenue caused by the material breach.
In the event of a material breach by Company of the covenants above, Company shall refund to Customer such amounts improperly credited, together with interest thereon at the FERC Refund Rate.
Southern LNG agrees not to (a) modify its agreement with the other existing Firm Shipper at the Xxxx Island Terminal in any manner that would negatively impact Customer or the terms, conditions, or rates of the services to be provided to Customer in connection with this Service Agreement or (b) offer to any third party (including the other existing Firm Shipper) rates or terms or conditions of service that are better than those provided or to be provided to Customer without offering such rates or terms or conditions of service to Customer; provided, however, the other existing Firm Shipper's negotiated rate as reflected in Southern LNG’s application filed in Docket No. CP06-470-000, et al., shall not be considered to negatively impact Customer as provided in (a) above or to be better than the rates, terms or conditions of service provided to Customer as provided in (b) above, regardless of any increases or decreases in the other existing Firm Shipper's rates under said shipper's negotiated rate agreement provided that the terms of such negotiated rate agreement have not been amended or changed.
Accepted and agreed to this 5th day of October, 2007
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/s/ Xxxxxxx Xxxxxx
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/s/ Xxxxxx X. Xxxxxx
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SHELL NA LNG LLC
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Southern LNG Inc.
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Vice President Strategy & Development
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Senior Vice President and Chief Commercial Officer
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