Asian LNG buying giants join forces to secure more flexible contracts

Japan’s JERA, the world’s largest corporate liquefied natural gas (LNG) buyer, has signed a deal with South Korea’s Kogas and China’s CNOOC Gas and Power Trading & Marketing to cooperate in the LNG business and to secure more flexible contracts.

Under the memorandum of understanding, the trio would discuss opportunities for mutual collaboration in joint procurement of LNG, joint participation in upstream projects, and cooperation relating to LNG shipping and storage, JERA said in a statement on Thursday.

Japan, South Korea and China are the world’s three largest LNG importing nations and account for more than 50 percent of the import market share.

LNG buyers have been for years urging the need for more flexible LNG contracts, especially when it comes to destination clauses that restrict them from reselling or swapping cargoes.

JERA expects this deal to “provide a platform for sharing views on issues related to traditional LNG business practices such as destination restrictions and will help in investigating ways to gain even greater flexibility in procurement,” the joint venture between Chubu Electric and Tokyo Electric said in the statement.

The company added it would continue to work together with LNG buyers and other companies both within and outside Japan as it seeks to “achieve even more competitive procurement in an LNG market undergoing great change.”

LNG World News Staff