The latest upheaval in the LNG market is on the buying side, the article argues, but if the balance shifts too far in that direction, financing liquefaction will become hard. It is a see-saw where the negotiating strength moves from side to side with the perception of the supply-demand balance.
Three of Asia’s largest LNG trading companies – Japan’s Jera, South Korean state-owned Kogas, and China National Offshore Oil Corp’s trading division – announced an agreement March 23 to discuss opportunities for mutual collaboration in the LNG business.
Another growing LNG importer India is also keen to join the initiative, according to oil minister Dharmendra Pradhan, speaking a few days after the news.
The three promise to rock the boat of the long-established industry, but sellers are not obliged to rewrite contract terms and they are likely to seek an even approach to contracts so that they can continue to build liquefaction capacity and operate it profitably.
“Joint procurement of LNG, joint participation in upstream projects, and co-operation relating to LNG shipping and storage” are among the specific areas for discussion included in the trio’s memorandum of understanding. Also on the agenda is concerted lobbying for the ending of oil-indexed contracts and other traditional features of the market.(Source: Natural Gas World)
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