Report: Japan’s FTC investigating LNG destination clauses

Report: Japan's FTC investigating LNG destination clauses

Japan’s Fair Trade Commission has reportedly launched an investigation to see whether the contract clauses restricting the resale of LNG cargoes impede free competition. 

The FTC’s investigation is still at an early stage with several hearings held with energy companies, Bloomberg reports, quoting sources close to the matter.

In case the FTC of the world’s largest LNG importer finds the destination clauses are in violation of the competition laws, the existing LNG contracts would be open for renegotiation.

The global glut has improved the bargaining position of Japanese LNG buyers that could shift from traditional buyers to sellers.

Currently about 80 percent Japanese, as well as South Korean, long-term import contracts have a destination close according to study conducted by a law firm Nishimura & Asahi for Japan’s Ministry of Economy, Trade and Industry (METI).

In its report in May, METI said that for a flexible LNG market the destination clauses “need to be eliminated to the greatest extent possible to increase the number of market players as well as trade volumes and frequencies to a level exceeding a certain critical mass.”

The results of the Fair Trade Commission’s investigation is expected to bring results by the end of 2016.

 

LNG World News Staff

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