Japanese firms sign multi-year agreements to buy LNG from Oman, U.S.

[December 27, 2022]  By Yuka Obayashi

TOKYO (Reuters) - Japanese companies have inked several deals to receive liquefied natural gas (LNG) supplies, with an up to 10 years basic agreement reached with Oman LNG and a 20 year deal signed with U.S.-based Venture Global on Tuesday.

Global LNG supply has been tight since Russia invaded Ukraine and cut gas supply flows to Europe, leading European nations to import record amounts of LNG cargoes, straining global supplies and elevating prices.

Top Japanese electricity generator JERA, and trading houses Mitsui & Co and Itochu Corp all signed supply deals with Oman LNG for a total of 2.35 million tonnes per year, state news agency ONA reported on Tuesday.

JERA, Japan's biggest importer of LNG, said it had signed a key term sheet with Oman LNG to buy up to 12 cargoes, or about 0.8 million tonnes of LNG per year for 10 years, beginning from 2025.

The contract, signed on a free-on-board basis, offered "high flexibility" and was expected to help Japan better respond to uncertainties with domestic LNG supply and demand, the power company said.
 

"LNG procurement competition has been intensifying and thus, stable procurement of fuel in a timely manner in line with the domestic electricity supply-demand situation is needed to secure a stable supply of energy in Japan," JERA said.

Mitsui and Itochu confirmed signing basic agreements with Oman LNG, but declined to give details.

Itochu, which has a 20-year contract with Oman LNG to buy 0.7 million tonnes of LNG per year that will expire in 2025, will continue discussions with the seller to set details, a company spokesperson said.

An liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan November 13, 2017. REUTERS/Issei Kato/File Photo/File Photo

GREATER ENERGY SECURITY

The statements followed a report by Japanese broadcaster NHK that all three companies would secure a total of about 2 million tonnes of LNG annually from Oman over 10 years beginning in 2025.

Other Japanese companies were also in talks with Oman LNG about term contracts, a government official told Reuters without naming the firms. If successful, they could take Japan's LNG imports from Oman above 3 million tonnes a year, he added.

The agreements with Oman LNG were signed during a visit to Oman by Japanese industry minister Yasutoshi Nishimura.

Separately, Japan's top oil and gas explorer Inpex Corp announced on Tuesday a 20-year deal with U.S.-based Venture Global LNG to import 1 million tonnes per year from the firm's Louisiana project due to begin construction in 2023.

The new supplies could help Japan diversify from Russia's Sakhalin project which accounts for 9% of Japan's total LNG imports of 74.3 million tonnes per year.

Last year, Japan imported 1.9 million tonnes of LNG from Oman, 2.6% of its total imports, and 7.1 million tonnes from the United States, accounting for 9.5% of its total imports.

(Reporting by Yuka Obayashi in Tokyo, additional reporting by Emily Chow in Singapore and Aziz El Yaakoubi and Nadine Awadallah in Dubai; Editing by Tomasz Janowski)

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