TOKYO, Sept 26 (Reuters) - Japanese gas distributor Tokyo
Gas aims to renegotiate long-term contracts with
liquefied natural gas (LNG) suppliers to boost flexibility by
scrapping clauses that restrict where the cargoes can be sold,
its president said on Thursday.
Japan's Fair Trade Commission in 2017 ruled that destination
restrictions preventing the resale of contracted LNG cargoes
breached competition rules, but Japanese companies have been
slow to bring the terms of existing deals into compliance.
"For most new term contracts, we basically try to win deals
that come destination-free," Takashi Uchida, president of Tokyo
Gas, told reporters on the sidelines of the LNG
Producer-Consumer Conference in Tokyo.
"For our existing long-term contracts such as 20-year
contracts, we are trying to renegotiate to gain flexibility in
destination when prices are reviewed," he said.
Buyers and suppliers typically review the prices of
long-term contracts every four to five years.
Tokyo Gas, Japan's biggest gas seller in cities and a major
buyer of LNG, has stepped up its efforts to diversify supply
sources and price formulas by using different types of price
index in an effort to improve competitiveness, Uchida said.
Earlier this year, the company signed a deal with Royal
Dutch Shell for the long-term supply of LNG, partly
using a coal-linked pricing formula - an unusual move for an
Asian LNG buyer.
"I believe we can be even more creative," he said, adding
that recent oversupply in the market made it easier to obtain
good terms.
Japan's JERA, the world's biggest buyer of LNG, has
renegotiated some of its contracts with suppliers to drop
destination clauses, Sunao Nakamura, JERA's managing executive
officer, told Reuters recently.
(Reporting by Yuka Obayashi and Jessica Jaganathan; Editing by
Dale Hudson)
