Japan, China, Korea Announce LNG Cooperation

The world's three biggest LNG importers – Japan, China and South Korea – have decided to join forces, they said in a joint statement May 9 during the seventh Japan-China-South Korea trilateral summit in Tokyo.  

“We reaffirm the necessity of co-operation in energy between the three countries for the realisation of sustainable development and shared prosperity in northeast Asia. In this regard, we decide to conclude a LNG co-operation memorandum of understanding (MoU) between the three governments on an appropriate occasion in order to improve the transparency and liquidity of the northeast Asian LNG market,” the statement said. Media reports suggest that the MoU was signed by the three nations on the same day.

With Asia becoming the biggest consumer of LNG, buyers such as Japan, China, South Korea and India are looking to form a buyer’s group so that they can extract more favourable deals. Last year, India and Japan finalised an agreement to co-operate in jointly developing what Indian oil minister Dharmendra Pradhan has called “a liquid, flexible and global LNG market.” India is the world’s fourth biggest LNG importer after Japan, China and South Korea.

Both China and India imported record volumes of LNG last year as local governments in these countries promoted cleaner fuels to tackle chronic air pollution in urban centres. China also became world second biggest importer last year overtaking South Korea. Stronger Brent crude oil prices spell bad news for LNG buyers as the prices of the two are linked in long-term contracts. Oil is now not far short of $80/barrel, as the threat of lower exports from Iran stokes market sentiment.