File Photo: A liquefied natural gas (LNG) tanker is tugged towards a thermal power station in Futtsu, east of Tokyo, Japan, November 13, 2017. (REUTERS/Issei Kato)
Japan agreed to purchase more liquefied natural gas from the US and Oman in the latest move to secure fuel supplies and avoid future shortages.
The new long-term deals:
Inpex Corp., Japan’s top gas explorer, inked a deal to procure 1 million tons a year from Venture Global LNG’s CP2 export project in Louisiana for 20 years. CP2 is slated to begin construction next year, according to Venture Global.
Several Japanese companies, including Mitsui & Co. and Itochu Corp., will enter an agreement with Oman to purchase an additional 2 million tons or so a year from 2025 for 10 years, the NHK said on Tuesday. Bloomberg previously reported that Mitsui was shortlisted by Oman.
The deals come as Japan’s government is reevaluating how it can enhance energy security in the face of a fuel crunch at home. Global LNG supply is slated to remain tight for years, which threatens to increase import costs and add to rising inflation.
This also marks a shift for Japanese LNG importers, which had been moving away from long-term deals on the expectation that the transition to cleaner energy sources would reduce gas demand this decade. Companies were instead increasing dependence on the short-term spot market to secure LNG supplies.
However, with the spot market tight and prices near a record high, Japanese companies are now reversing course and locking in supply for years at more attractive rates.
