Jera Inks Deal with Malaysia LNG

The world's biggest LNG buyer, Japan's Jera, said October 25 it has signed a preliminary agreement to buy from Petronas’ subsidiary Malaysia LNG.

Jera plans to purchase up to some 2.5mn mt/yr of LNG from Malaysia LNG for a period of three years beginning in 2018. The LNG will be sold as either delivered ex-ship (DES) or on a free-on-board (FOB) basis, Jera said.

Jera, a joint venture between Tokyo Electric Power and Chubu Electric Power, considers the destination clause in this heads of agreement to be in line with the 'Survey on LNG Trades' report released by the Japan Fair Trade Commission in June 2017. It said this “will contribute to its ability not only to respond to uncertainties in LNG demand, but also to put Jera in position to optimise its LNG operations.”

The Japan Fair Trade Commission in its June 2017 report described destination clauses as anti-competitive, and banned these and other restrictive clauses from new contracts entered into by Japanese importers.

Last week Japan and India, respectively the top and 4th largest LNG importing nations in 2016, signed a memorandum of co-operation (MoC) to work together in developing what Indian oil minister Dharmendra Pradhan called “a liquid, flexible and global LNG market”.

“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 before signing of the MoC. 

Petronas is the controlling shareholder in Malaysia LNG but minority shareholders in its liquefaction complexes include Shell, the Sarawak regional government, Japan's Mitsubishi, JX Nippon and Diamond Gas (Graphic credit: Malaysia LNG group of companies)

Shardul Sharma