EFET (European Federation of Energy Traders)

A group of more than 100 energy-trading companies from 27 European countries focused on improving the conditions of energy trading in Europe and the promotion of a sustainable and liquid European wholesale energy market.

Embedded derivative

A derivative instrument contained within another contract – the host contract. The embedded derivative may change in value in different ways or to different magnitudes than its host contract (as it may be linked to a different price, asset or index). 

Emergency-shutdown systems (ESD)

A system, usually independent of the main control system, that is designed to safely shut down an operating system, limiting the amount of LNG released. These systems are linked to automatic gas, liquid and fire detection equipment. There are also detectors for monitoring LNG levels and vapour pressures within storage tanks and other monitoring equipment around LNG facilities.

Emissions trading

Emissions trading is part of the drive to reduce emissions of greenhouse gases (GHGs) and other pollutants, which is increasingly affecting the shipping industry. Under an emissions trading scheme (ETS), a central authority, such as a government, issues companies with a certain amount of permits allowing them to emit carbon up to a certain level. If they exceed that quota, they must buy permits from other companies, normally through a trading exchange. If they emit less carbon than their quota then they can sell their excess permits. If the permits are valued correctly, the result should be an overall cut in carbon emissions, as polluters try to cut their emissions costs. The world’s largest scheme is the EU ETS, but this has struggled to get off the ground as the low price of permits (carbon price) in recent years has given participants little incentive to cut carbon emissions. A properly functioning EU ETS should favour LNG and other gas over coal as power sources in Europe, given their lower carbon emissions per unit of energy. While the ETS concept is closely associated with carbon dioxide emissions, it can also be applied to other gases, such as nitrogen oxides (NOx) and sulphur oxides (SOx). See also Maritime Emissions Controls  

Enabling agreement

Provides the general terms and conditions for the purchase, sale, or exchange of LNG, pipeline gas and electricity, but does not list specific contract details.


The ultimate consumers of natural gas, including residential, commercial, industrial, wholesale, cogeneration and utility electricity-generation customers.

Engineering, procurement and construction (EPC) contract

1) a legal agreement setting out the terms for all activities required to build a facility to the point that it is ready to undergo preparations for operations as designed. 2) the final contracting phase in the development of the export portion of the LNG chain that defines the terms under which the detailed design, procurement, construction and commissioning of the facilities will be conducted. Greenfield LNG project development entails a wide variety of design, engineering, fabrication and construction work far beyond the capabilities of a single contractor. Therefore, an LNG project developer divides the work into a number of segments, each one being the subject of an EPC contract. For example, separate EPC contracts are executed for construction of onshore LNG plant and related infrastructure, for the offshore production facilities and for the pipeline from the offshore location to the plant site. See Front-end engineering and design (FEED) contract


Increasing the heat content of natural gas by mixing it with a gas of higher Btu content.


Flag carried by a ship to show her nationality.

Environmental-impact assessment (EIA)

An assessment of the impact of an industrial installation or activity on the surrounding environment, conducted before work on that activity has commenced. The original baseline study, a key part of this process, describes the original conditions.

Environmental Protection Agency (EPA)

The US federal agency that administers federal environmental policies, enforces environmental laws and regulations, performs research and provides information on environmental subjects. The agency also acts as chief advisor to the President on US environmental policy and issues.

Equation of state

A mathematical relationship between pressure, volume and the temperature of a fluid that permits the prediction of the real volumetric and thermodynamic behaviour.

Equity gas

The proportion of gas to which a producing company is entitled as a result of its financial contribution to the project.

Escalator clause

A clause in a gas purchase or sale contract that permits adjustment of the contract price under specified conditions.

European Commission

The executive body of the European Union. Its Directorate General of Energy and Transport develops community transport and energy policies, including dealing with state aid, and is responsible for managing the financial support programmes for the trans European networks, technological development and innovation.

European Gas Regulatory Forum

Set up in 1999 to discuss the creation of a European internal gas market and cross-border trade of gas. Participants include regulatory authorities, governments, the EC, transmission system operators, gas suppliers and traders, gas exchanges and others. Also known as the Madrid Forum.

Excess capacity

A pipeline operating below capacity has excess capacity and is capable of receiving additional gas.

Exergy analysis

The evaluation of a thermodynamic process’ irreversibility and inefficiency. Exergy analysis is a fundamental design mechanism to increase efficiency and reduce costs.

Export-credit agencies (ECAs)

Government agencies whose mission is to facilitate the export sale of goods and services by providing credits that are more attractive than those available commercially and by providing security for credit and political risk that may not be available at an economic cost from private-sector finance sources. ECAs of the US, Europe and Japan have been consistent financing sources for LNG projects; includes Export-Import Banks of the US (USEXIM) and Japan Bank for International Cooperation (JBIC), the UK’s Export Credit Guarantee Department (ECGD), Germany’s Hermes, France’s Coface and Italy’s Sace. See also Multilateral institutions

Ex-ship contract

See Delivered

Extraction loss

The reduction in volume of wet natural gas caused by the removal of natural gas liquids, hydrogen sulphide, carbon dioxide, water vapour and other impurities from the natural gas stream. Also called shrinkage.

Evergreen clause

A contract clause that extends the contract beyond the initial term, until one of the parties gives a required notice of termination.