Japan, India Seek Better Price for LNG Imports

Japan, India Seek Better Price for LNG Imports

Japan and India are teaming up to negotiate a better price for LNG  imports.

Japan’s trade minister Toshimitsu Motegi met India’s minister for petroleum and natural gas Veerappa Moily on Monday in Tokyo.

The LNG prices in Asia are substantially higher than those of other major consuming regions such as Europe and North America (the Asian premium),” the two ministers said in a joint statement.

Even as the position of natural gas as an alternative fuel for oil is fading and the rationality for such price formation is less clear compared to past, the majority of LNG contracts in the Asia Pacific market are long term with a pricing formula that is linked to the oil price. Since the prices of individual contracts signed on a bilateral basis are confidential, there are no reliable price indices that accurately reflect the LNG supply and demand balance in the region at this point,” the ministers said.

The ministers agreed to set up a multilateral group of buyers for LNG to push for lower prices, and they also plan to ask other importers, such as South Korea and Singapore, to join them.

For both LNG producers and consumers, the LNG price should be at mutually acceptable level, considering the sustainability of the LNG market.

Procuring LNG from more diversified suppliers and/or regions will lead to the increase of market connectivity and price convergence among regions, which should result in more competitive pricing of LNG,” the statement added.

[mappress]
LNG World News Staff, September 10, 2013; Image: Tokyo Gas