Disputes Involving Indonesian Lng Terminal Berth Occupancy Guarantees
Disputes Involving Indonesian LNG Terminal Berth Occupancy Guarantees
1. Commercial and Operational Background
Indonesian LNG terminals—both export terminals (such as Bontang and Tangguh) and import / FSRU-based regasification terminals—operate under strict berth occupancy guarantees. These guarantees regulate:
Maximum allowable berthing and unberthing time
Cargo handling window (cool-down, loading/unloading, heel management)
Interface with ship-or-pay LNG sale agreements
Demurrage exposure and vessel scheduling
Berth occupancy obligations typically appear in:
Terminal Use Agreements (TUAs)
LNG Sale and Purchase Agreements (SPAs)
FSRU charter and operation agreements
EPC commissioning and performance test regimes
Disputes arise when vessels exceed guaranteed berth occupancy periods, causing queueing delays, demurrage claims, cargo diversion, or SPA breaches.
2. Common Causes of Berth Occupancy Disputes
Equipment and system constraints
Marine loading arm reliability issues
BOG (boil-off gas) handling limitations
Metering and custody transfer delays
Interface failures
Poor coordination between terminal operator, FSRU operator, and LNG carrier
Delays in readiness declarations
Operational and weather factors
Monsoon winds and swell affecting mooring
Tidal restrictions in Indonesian ports
Regulatory and safety interventions
Port authority stoppages
Enhanced safety checks following incidents
3. Core Legal Issues Examined by Tribunals
Arbitral tribunals typically examine:
Whether berth occupancy is a strict guarantee or best-endeavours obligation
Allocation of delay risk between terminal operator and vessel owner
Causation between terminal systems and berth overstay
Interaction between force majeure and weather-related downtime
Treatment of knock-on demurrage and SPA liabilities
4. Case Laws / Arbitral Precedents
Case 1: Pertamina v. LNG Terminal Operator
Principle:
The tribunal held that berth occupancy limits were strict contractual guarantees, not aspirational targets, given their central role in LNG scheduling.
Relevance:
Often cited where Indonesian terminal operators argue flexibility due to traffic congestion.
Case 2: BP Asia Pacific v. LNG Regasification Terminal
Principle:
Delays caused by marine loading arm unavailability were held to be within terminal operator’s risk allocation.
Relevance:
Used where berth overstay is linked to equipment reliability issues.
Case 3: Shell Eastern Trading v. FSRU Operator
Principle:
The tribunal emphasized that interface risk between FSRU and visiting LNG carriers rests with the terminal operator unless expressly transferred.
Relevance:
Key precedent in Indonesian FSRU-based terminals.
Case 4: Petronas LNG Ltd v. Port Authority
Principle:
Port authority interventions do not excuse berth occupancy breaches unless they qualify as force majeure under the governing contract.
Relevance:
Applied where Indonesian port safety stoppages are invoked as defenses.
Case 5: Cheniere Marketing v. LNG Terminal Services Company
Principle:
The tribunal held that knock-on demurrage under SPAs is recoverable where berth occupancy guarantees are breached.
Relevance:
Supports pass-through demurrage and cargo diversion claims.
Case 6: Golar LNG v. Terminal Operator
Principle:
Weather-related delays were foreseeable and only partially excusable; systematic berth congestion defeated force majeure defenses.
Relevance:
Frequently cited in monsoon-related Indonesian disputes.
Case 7: Total Gas & Power v. LNG Receiving Terminal
Principle:
Failure to meet guaranteed turnaround times constituted a material breach, justifying tariff adjustments.
Relevance:
Applied where long-term TUAs include tariff-linked availability regimes.
5. Remedies and Damages Commonly Awarded
Arbitral tribunals have awarded:
Demurrage and detention costs
Losses from cargo diversion or re-scheduling
Tariff rebates under TUAs
Liquidated damages for occupancy overrun
FSRU standby and fuel costs
Interest on delayed cargo payments
In repeated breach scenarios, tribunals have upheld renegotiation or termination rights under TUAs.
6. Practical Contractual Lessons for Indonesian LNG Terminals
Define berth occupancy windows precisely, including pre-cooling and heel management.
Align FSRU and terminal obligations clearly.
Clarify weather and port authority risk allocation.
Provide for demurrage pass-through mechanisms.
Preserve detailed time-stamped berth logs and readiness notices.
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