Commercial Due Diligence

Commercial Due Diligence and Expert Witness

The energy industry often requires its stakeholders to invest significant quantities of time, effort and money in major gas supply, transportation and storage projects often with high levels of technical, commercial, environmental and political complexity. Typically, this may include the development of new greenfield LNG projects, the sale of an existing pipeline to another party or simply the refinancing of an existing LNG supply project. Whatever the context it is important that rigorous due diligence takes place to ensure that, the assets purchased are in the condition described and that the commercial and operational frameworks are fit for purpose.

MJMEnergy has advised on a variety of due diligence consultancy projects throughout the gas chain. This has included due diligence on the sale of a pipeline network involving a review of its operational assets and commercial contracts, a review of the contractual framework associated with a new LNG terminal development, and an initial due diligence of a distribution network sale. In addition MJMEnergy staff have served as expert witnesses in legal proceedings relating to gas supply and transportation arrangements.

Consultancy Projects:

The following titles are examples of some of the energy consultancy projects that we have carried out in this area of expertise. (Clicking the title will provide more information.)

  • Due Diligence for Potential Purchase of a Gas Distribution Business
  • Due Diligence for Potential Purchase of a Gas Distribution Business

    Mike Madden, in conjunction with Gas Strategies, advised an IOC in its potential purchase of a Russian gas distribution business. The areas of work involved the initial due diligence in terms of the following areas:

    • The current and future potential customer base.
    • The current and future planned infrastructure, focussing on its capacity, condition and level of maintenance.
    • The level of leakage and other unaccounted for gas in the network.
    • The number and quality of personnel, including an assessment of the experience, and professional qualifications of the staff and manual employees.

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  • Due diligence for potential purchase of a small high pressure gas pipeline network
  • Due diligence for potential purchase of a small high pressure gas pipeline network

    MJMEnergy, in conjunction with an international energy consultancy provided technical and commercial due diligence to the purchaser of this high-pressure pipeline asset. The areas of work involved the initial due diligence in the following areas:

    • A review of the technical infrastructure, its capacity and condition.
    • A review of contractual framework for the operation and sale of the networks pipeline capacity.
    • A review of the interaction between the network and the wider gas network code.

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  • Singapore Expert Witness on Contractual Dispute
  • Singapore Expert Witness on Contractual Dispute

    Mike Madden of MJMEnergy acted as an expert witness in a dispute regarding third party access to pipeline infrastructure in Singapore.

    The key issues related to allocation arrangements and concerns regarding commingling of gas and the impact on gas quality, specifications and pressures.

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  • Pakistan Provision of Advice for the Purchase of RLNG/LNG
  • Pakistan Provision of Advice for the Purchase of RLNG/LNG

    MJMEnergy, working in in conjunction with QED advised SSGC and SNGC in respect of the procurement of RLNG and/or LNG. In particular, the development and management of an international tender process for the selection of RLNG/LNG suppliers and the negotiation of supply agreements.

    MJMEnergy provided technical support (with specific responsibility for gas transmission), review and comments on tender documents, and review of gas transmission connections, metering and technical standards.

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  • Ghana LNG Project
  • Ghana LNG Project

    MJMEnergy in conjunction with an international energy consultancy provided support to VRA in Ghana in relation to developing LNG imports via an FSRU. Whilst Ghana does obtain a large amount of its power from large hydroelectric projects, during periods of drought the shortfall is currently made up by diesel-fired power generation. This is neither very efficient nor environmentally friendly, therefore the purpose of this project was to provide an alternative source of fuel to diesel when required by the power generators.

    Areas covered during the project included the following:

    • Development of tender documentation - in order to develop this project the VRA would need to tender for the FSRU and associated LNG supplies from the international market. The purpose of this tender was to facilitate that process.
    • High level review of Terminal User Agreements - the project team provided the client with a brief review of TUAs in order for the client team to appreciate the complexity of the project.
    • Analysis of the supply/demand match - the supply/demand match in Ghana and in particular the highly seasonal nature of the gas demand will influence the commercial framework. Therefore the project team analysed the characteristics of the demand profile.

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  • Expert Witness in Dispute over Legacy Gas Transportation Agreements in the UK
  • Expert Witness in Dispute over Legacy Gas Transportation Agreements in the UK

    Mike Madden of MJMEnergy acted as an expert witness in a dispute between a gas producer and a large power generator in the UK over the impact of switching from a distance-related monthly balancing transportation contract to an entry/exit Network Code based transportation agreement. This work entailed comparing the relative strengths and weaknesses of the two regimes from an operational and commercial perspective and presenting them to the court.

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Key staff and associates:

  • Mike Madden
  • Nick White
  • David Long
  • Jeremy Bending
  • Chris Le Fevre
  • Bill Sooby
  • David Haynes
  • Philip Johnson