JERA negotiating LNG-supply deal without destination clause

Japan’s JERA, the world’s largest buyer of liquefied natural gas (LNG), is reportedly lining up a contract that will have no destination clause in it.

JERA is looking to replace its expiring long-term contracts with new LNG volumes, the company’s president Yuji Kakimi told Reuters in an interview.

The company has been looking to exclude the destination restrictions from its supply deals, following the decision by Japan’s Fair Trade Commission (FTC) to declare such clauses as anti-competitive.

To comply with the ruling, long-term suppliers have shown willingness to remove the destination clauses from their contracts, Kakimi said.

Some of JERA’s current contracts, namely those with Malaysia, Abu Dhabi and Qatar, are set to expire in 2018, 2019 and 2021 respectively. Each of these deals ensures supply of around 4 million tons of LNG per year.

Kakimi added that the company will have room for new LNG supply deals in the future, and talks are already ongoing with a number of potential suppliers. The new deal would not include the destination clause, limiting the possible delivery points.

He did not reveal the supplier, the term nor the volume JERA would secure under the new deal, however, the company is looking to cut down on long-term deals by 2030 by 42 percent.

LNG World News Staff