JERA in talks for LNG contract with no destination limits

JERA has been pushing to drop the so-called destination clause in long-term contracts that limits where a cargo can be delivered, after Japan’s Fair Trade Commission (FTC) ruled that such restrictions are anti-competitive.

Faced with that ruling, sellers of long-term LNG have been willing to remove the destination clauses, President Yuji Kakimi said in an interview at the Reuters Global Commodities Summit.

Talks on the new term contract come as JERA faces the expiry of long-term contracts with Malaysia, Abu Dhabi and Qatar in 2018, 2019 and 2021 respectively, each with annual volumes of around 4 million t.

Those contracts, which industry sources have said include destination restrictions, are not to be renewed automatically.

For the moment JERA’s long term supply contracts closely match its demand.

He did not reveal the seller, volume or term of the contract under discussion, which would be JERA’s first since the Fair Trade Commission’s ruling.

JERA plans to cut the volume of gas it buys under long-term contracts by 42% by 2030 from current levels.

He said sellers of LNG from older projects who want to sign new contracts can afford to be more flexible in their offers than proposed new LNG projects that need to lock in long-term deals to secure financing for their multi-billion dollar plans.

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/11102017/jera-in-talks-for-lng-contract-with-no-destination-limits/