Report: Japan’s trade commission starts LNG destination clauses inquiry

The Japanese Fair Trade Commission has reportedly launched a formal investigation into the destination clauses within the LNG supply contracts signed by the country’s LNG importers. 

The FTC has ordered Japan’s LNG buyers to provide details on contract requirements, preventing the reselling of LNG to third parties, Reuters reports, citing sources close to the matter.

The regulator intends to review whether the destination clauses limit competition, which could lead to a number of contracts, worth hundreds of billions of dollars, being renegotiated.

The world’s largest LNG importer, Japan, together with other Asian buyers, believes the clauses restrict the trading of LNG in cases when it would be better to sell to other markets.

The companies that fail to comply with orders that have reportedly been issued late last month could face penalties. The deadline for submitting the requested information is the end of November, the report says.

Earlier in May,  Japan’s Ministry of Economy, Trade and Industry (METI) recommended the supply contracts to be reworked in order to allow the buyers to resell the imported LNG or negotiate better prices.

LNG World News Staff