On Tuesday, a number of agreements for the supply of liquefied natural gas (LNG) were signed by Japanese businesses, including a preliminary agreement with Oman LNG that can last up to ten years and a 20-year agreement with Venture Global, based in the United States.
LNG supply has been tight since Russia attacked Ukraine and slice gas supply streams to Europe, driving European countries to import record measures of LNG cargoes, stressing worldwide supplies and raising costs.
Oman LNG announced on Twitter on Tuesday night that top Japanese electricity generator JERA and trading houses Mitsui & Co. and Itochu Corp had signed binding term sheet agreements with Oman LNG for a total of 2.35 million tonnes per year beginning in 2025.
JERA and Itochu will receive 800,000 tonnes annually from Oman LNG, while Mitsui will receive 750,000 tonnes annually.
These figures corroborated a statement made earlier on Tuesday by JERA, the largest LNG importer in Japan, stating that it had signed a key term sheet with Oman LNG to purchase up to 12 cargoes, or 800,000 tonnes annually, for a period of ten years beginning in 2025.
The agreement, endorsed on a free-on-board premise, advertised “high adaptability” and was supposed to assist Japan better answer vulnerabilities with homegrown LNG market interest, the power organization 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 that they had signed agreements with Oman LNG, but they did not provide any specifics.
A spokesperson for the company stated that Itochu, which has a 20-year contract with Oman LNG to purchase 700,000 tonnes of LNG annually, will continue discussions with the seller to establish the specifics.
GREATER ENERGY SECURITY
The statements came in response to a report by Japanese broadcaster NHK that all three businesses would procure approximately 2 million tonnes of LNG annually from Oman for a period of ten years beginning in 2025.
A government official told Reuters, without naming the companies, that Oman LNG was also in talks with other Japanese companies about term contracts. He added that if they are successful, they could increase Japan’s annual imports of LNG from Oman to more than 3 million tonnes.
During a visit to Oman, Japanese industry minister Yasutoshi Nishimura signed the agreements with Oman LNG.
Separately, the largest oil and gas explorer in Japan, Inpex Corp., announced on Tuesday a 20-year agreement with Venture Global LNG, based in the United States, to import 1 million tonnes annually from the Louisiana project, which will begin construction in 2023.
Japan could benefit from the new supplies by diversifying away from Russia’s Sakhalin project, which imports 9% of its annual 74.3 million tonnes of LNG.
Japan imported 1.9 million tonnes of LNG from Oman, which represented 2.6% of its total imports, and the United States imported 7.1 million tonnes, which represented 9.5% of its total imports.
