What is the "Open Season" process?

Contracts to ship have a various types.But the bulk of shipment contracts on a gas pipeline are based on long term contracts that is known Firm Transportation (FT) commitments.
An FT commitments is a long term contract ,usually between 10 to 20 years, to pay for capacity to be shiped by pipeline and the shipper is obliged to "ship or pay" whether or not shipment is actually occured.The concept of S.O.P on a gas pipeline is similar to concept of T.O.P in the LNG industry.
This commitment is essential for validity of pipeline project.Since it ensures the financiers from the ability of project to generate of sufficient revenue to cover the project debts.
Building a new pipline requires to getting the certificates before construction.the process to obtain this certificates starts with the sponsors of a new gas pipeline holdings that is called an initial open season.At the open season the pipeline entity makes a request for potential shippers that have a capability to ship a gas by pipeline and are interested in FT commitment.This process provide following important information for pipeline entity:

1-Is there enough interest for FT commitment to carry project ahead?
2-is there a need to modify the project from the technical or other aspects?
3-is there a enough interest for financiers to obtaining construction financing?

What is the Destination Clause?

Destination clause in Gas contracts means that buyer does not right to resell the purchased cargo in another area except what is agreed in agreement.This clause as a inflexibility on behalf of seller had always been discussed between both sides .However the rigidity of this clause depends on bargaining power of each one.The most important point about the destination clause is that how does it affect seller's profit?On the other word, in what case the seller can neglects the destination clause without his profit to be affected.Since destination clause lead to market discrimination so it would be increased the seller's profit but some studies indicate that if demand elasticity and transportation cost are homogenous in two regions, seller can ignore the destination clause because of it will not affect profit function.Nowadays sellers show more flexibility in this regard but destination divert is still subject to seller's admission and sharing the profit due to this changing.

LNG vessel market

In 2004, world LNG trade reached over 130 mtpa and drew significantly raise in the LNG demand . The changes arise from both sides import and supply.On the import side, some new players such as India and UK enter to the market.India imported his first LNG cargo in 2004 and UK restart to import LNG in July 2005 after long interval from 1964.North America's demand are steady increasing and China started recently to import.Along with these changes some other countries like Spain, South korea, and Taiwan are showing strong demand to import LNG.In this circumstance we can say that Energy Dragon is awaking.On the LNG supply side,existing projects are scheduling to expansion their production.Some new projects are under construction and is expected that enter to market by 2010 and 2011.Studies by MOL indicate that there was a 187 LNG vessels by August 2005.A 10 of these is uncommitted.Shipyards have a capacity for 35 further vessel by end of 2010 and 30 vessel are uncommitted and can be dedicated to any project by 2010.So the supply of LNG vessel by end of 2010 would be 75.Meanwhile MOL study point out that the number of LNG vessle reqired to meet demand of LNG projects would be startd till 2010 is around 85 i.e a there is a shortfall of approximatly 10 vessel by the end of 2010.