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LNG producers take time to relax destination clauses despite Japan ruling

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LNG Industry,

According to Reuters, global LNG suppliers are taking time to revise destination clauses in supply contracts for Japanese buyers, despite a ruling by authorities in Japan that the provisions are anti-competitive.

The Fair Trade Commission (FTC) ruled earlier this year that restrictions on reselling contracted LNG cargoes breached competition rules and urged buyers to remove the clauses as quickly as possible.

However, a source at a Japanese buyer said while his company is pushing suppliers to take action, they are having little success.

Producers see little need to engage in the discussion said a gas executive at a major oil and gas company.

“There’s no real energy around it. Everyone is willing to have a conversation but people are not pushing the issue,” the executive said. He added that producers feel no need to be “knocking on the doors of buyers” to renegotiate contracts.

Similarly, while Japan’s JERA Co. has said sellers of long-term LNG have been willing to remove the destination clauses, talks have not led to agreements yet.

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