Tokyo Gas only to sign LNG deals with no destination clauses

Japan’s Tokyo Gas will only sign long-term contracts in the future if the destination clause, restricting where the cargo can be sold, is included. 

The company’s president Michiaki Hirose was cited by Reuters as saying that Tokyo Gas has no intention of signing new deals with destination restrictions.

The company’s decision follows the ruling of Japan’s Fair Trade Commission saying that the destination clauses restrict competition.

This has prompted Japanese buyers to either rework existing contracts or look for new deals that have no such restrictions.

Tokyo Gas is currently negotiating new deals but is using the FTC ruling as leverage in its negotiations with potential suppliers.

In addition, the company plans to increase its share of short-term and spot LNG deals to 30 percent of its total demand to be better prepared to respond to the volatile market.