Japan to Begin Study Next Month on Joint-Purchase Plan for LNG

Japan, the world’s largest importer of liquefied natural gas, will begin a study next month on how to link domestic and foreign buyers in purchasing groups to reduce energy costs.

The country will work on details to enable joint procurement of LNG by linking up buyers to increase their bargaining power against suppliers, Ryo Minami, a director for the oil and natural gas division at the Ministry of Economy, Trade and Industry, said in an interview at a conference today in Tokyo.

LNG in Japan costs four times as much as in the U.S., Toshimitsu Motegi, trade and industry minister, said at the conference. Bringing down LNG prices is a pressing issue for Japan, he said.

“By combining buyers from Japan and other countries, we can increase the volume needed to gain bargaining power,” Minami said. “We will conduct hearings for local utilities and gas companies as well as foreign companies and plan to complete details for the joint-purchasing program soon.”

One of the barriers for group buying is the destination clauses that are now part of most LNG contracts. They limit the ports or countries that can receive a given LNG cargo. Suppliers from the U.S. and Canada are expected to be more flexible on destinations, he said.

To contact the reporter on this story: Yuji Okada in Tokyo at yokada6@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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