Mubasher: Japan’s anti-monopoly regulator has ruled that all new contracts for liquefied natural gas (LNG) shall not contain restrictions on the resale cargoes, Reuters reported.
This ruling, therefore, ends a practice the country’s buyers have said time and again was unfair.
Following the decision, it is expected that more buyers will take part in LNG cargo trading in Japan.
Various media reported that this decision may prompt similar challenges to the practice in other countries in Asia, where LNG buyers have repeatedly complained that this practice of placing destination clauses in LNG contracts results in the unfair restriction of trading the fuel.
“It would make more economic sense to on-sell supplies into other markets,” Reuters said, indicating that may producers in Japan, the world’s biggest LNG importer, have begun offering contracts without resale or destination restrictions.
A Singapore-based LNG trader told the news agency that there has been lots of talk on the matter, with many suppliers cutting down on restrictions. He added that this step will likely affect Qatari contracts “especially in this oversupply climate."
Between now and 2021, many producers in Qatar have several long-term LNG contracts up for negotiation with Japan, Reuters said, indicating that producers in Malaysia will also be impacted by the ruling.
In late 2016, Japan’s Fair Trade Commission ordered the country’s LNG buyers to provide details on requirements that prevent them from reselling LNG to third parties.
