Off-Specification LNG Clause Samples

Off-Specification LNG. 12.3.1 If Project Co, acting as a Reasonable and Prudent Operator, determines prior to loading a cargo that the LNG is expected not to comply with the FOB Specifications (“Off-Spec FOB LNG”) upon loading, then: (A) Project Co shall give notice to the Transporter of the extent of the expected variance as soon as practicable (but in no case later than the commencement of loading of the cargo); (B) the Transporter shall use reasonable efforts, including coordinating with DES Buyer the operator of the Receiving Terminal, to accept such LNG for delivery to DES Buyer where the LNG would be acceptable to the DES Buyer and the operator of the Receiving Terminal, each of them acting in their sole discretion, and would not prejudice the safe and reliable operation of any LNG Tanker, the Receiving Terminal, and any downstream facilities being supplied regasified LNG; (C) if the Transporter can accept delivery of such cargo, then the Transporter shall notify Project Co of the Transporter’s estimate of the direct costs to be incurred by the Transporter, any Affiliate of the Transporter, and the operator of the Receiving Terminal in transporting and treating such Off-Spec FOB LNG (or to otherwise make such LNG marketable), and, to the extent Project Co agrees to such estimate, the Transporter shall take delivery of such cargo, and Project Co shall reimburse the Transporter for all reasonable documented direct costs incurred by the Transporter (including costs owed to any Affiliate of the Transporter, and the operator of the Receiving Terminal in transporting and treating such Off-Spec FOB LNG (or to otherwise make such LNG marketable) prior to and at the Receiving Terminal), provided, however, that Project Co’s liability shall not exceed *** percent (***%) of the estimate notified by the Transporter and agreed by Project Co; and (D) if (1) the Transporter determines in good faith that it cannot, using reasonable efforts, receive such cargo, (2) Project Co rejects the cost estimate or (3) the Transporter anticipates that it might be liable for costs that would not otherwise be reimbursed pursuant to Paragraph 12.3.1(C), then the Transporter shall be entitled to reject such cargo by giving Project Co notice of rejection within seventy-two (72) hours of the Transporter’s receipt of Project Co’s notice pursuant to Paragraph 12.3.1(A). In the event the Transporter rejects a cargo under this Paragraph 12.3.1(D), Project Co shall be deemed to have failed to make available such...