Reuters reports that these requests are being made amid slumping spot LNG prices.
When asked if Japanese buyers are asking for cargo delays or volume cuts from Ichthys, Inpex’s Senior Managing Executive Officer Masahiro Murayama said: “We are getting those requests as spot LNG market prices are lower than term contract prices.
“(Buyers) have a right to ask to raise or reduce quantity within a certain range agreed under the long-term contracts.
“It does not mean that we will lose all quantity, but some adjustments such as increasing or cutting quantity have been made.”
According to Reuters, the fall in LNG spot market prices is also causing Japanese utilities to take a more aggressive approach in price reviews built into traditional long-term contracts linked to the price of oil.
Typically, long-term LNG contracts are priced against Brent oil prices, which are currently at approximately US$10/million Btu compared to spot cargoes at approximately US$4/million Btu.
Murayama said that the LNG spot market has been weighed down by concerns regarding weakening demand and slowing economy, adding: “It does not mean that we will lose all quantity, but some adjustments such as increasing or cutting quantity have been made.”
Read the article online at: https://www.lngindustry.com/lng-shipping/12082019/japanese-buyers-seeking-delays-and-volume-cuts/