India, Japan Finalise LNG Co-operation Deal
India and Japan have finalised an agreement October 18 to co-operate in jointly developing what Indian oil minister Dharmendra Pradhan has called “a liquid, flexible and global LNG market”.
Pradhan and the Japanese minister of economy, trade, and industry, Hiroshige Seko, signed a Memorandum of Co-operation (MoC) in Tokyo on Pradhan’s final day of his visit to Japan.
Pradhan is on a three-day visit, during which he met with officials from the Japanese oil and gas industry and attended the sixth Annual LNG Producer-Consumer Conference.
Speaking at the event, Pradhan stressed that a transparent, flexible and competitive market for LNG is important for India as the country imports close to 50% of its gas requirements as LNG. “As we increase the percentage of gas in our energy basket we need better terms and prices for our LNG contracts,” Pradhan said on Twitter, adding that he has requested the industry to work on removing restrictions such as the destination clause.
Indian oil minister Dharmendra Pradhan and Japanese minister of economy, trade, and industry, Hiroshige Seko after the signing of MoC in Tokyo (Credit: Dharmendra Pradhan's Twitter account)
The Indian government is aiming to increase the share of gas in the energy mix from today’s 6-7% to 15% over the next five years as it tackles rising pollution in Indian cities.
“The MoC will provide a framework for bilateral co-operation in facilitating flexibility in LNG contracts, abolition of [the] destination restriction clause and also explore possibilities of co-operation in establishing reliable LNG spot price indices reflecting true LNG demand and supply,” the Indian oil ministry said October 15.
India and Japan are major consumers of energy. In the LNG sector, Japan is the world's largest importer and India the fourth-largest. Under the Japan-India Energy Partnership Initiative signed in January 2016 the two sides agreed to work together to promote well-functioning energy markets and a transparent and diversified LNG market through the relaxation of the destination restriction clause.
Shardul Sharma