FOB (Free on Board)
“LNG FOB” – is LNG sold and delivered as commodity on the basis of FOB (Free On Board: Risk passes to buyer, including payment of all transportation and insurance costs, once delivered on board the ship by the seller) according to INCOTERMS 2010.
In an LNG FOB contract, the buyer lifts the LNG from the liquefaction plant and is responsible for transporting the LNG to the receiving terminal. The buyer is responsible for the shipping, either owning the LNG ships or chartering them from a shipowner. In a FOB contract, the seller requires assurance that the shipping protocols provide a safe and reliable off-take for the LNG to prevent disruption to the sales and purchase agreement (SPA)