| TOKYO, Sept 13
TOKYO, Sept 13 Japan's second-biggest city gas
supplier, Osaka Gas Co, may not sign new long-term
liquefied natural gas (LNG) contracts for the next several years
as the market shifts towards more active spot trade, a senior
company official said.
The company has commitments to take about 10 million tonnes
of LNG from mostly long-term contracts in 2020, and some of
those start expiring from 2021, starting with Indonesia and
The world's top LNG buyer, Jera Co, a venture of Tokyo
Electric and Chubu Electric, is eyeing drastic
cuts in long-term contracts, and those moves are putting
question marks over planned large-scale, multi-billion dollar
projects, which rely on long-term contracts to gain financing.
"If the market's liquidity improved to the point where it's
possible to buy or sell LNG any time, it would become less
necessary to rely on long-term," Sunao Okamoto, the company's
general manager of LNG Trading & Origination Team told Reuters
in an interview.
"We may perhaps replace all those volumes with short-term or
spot, but lowering the long-term ratio to 50 percent would be
too aggressive a move for a utility like us."
The company's annual LNG trading volume, which stands at
about 8 million tonnes, is set to rise to about 10 million
tonnes in 2020, including 2.5 million tonnes that it would sell
to other firms at home and abroad, Okamoto said.
The company first started selling LNG on in 2006, and has
been making a push to expand resale, touting services that
traders or majors would not normally do, such as offloading some
of the gas from a tanker to a buyer's terminal, he said.
It is considering reselling destination-free cargoes from
such projects as the U.S. Freeport facility that is set to start
output from 2018.
Osaka Gas has a 1.25 percent stake in Chevron's Gorgon
project in Australia. Okamoto said production was progressing
smoothly and it expects to receive its first cargo from the
The company is in talks with multiple sellers of long-term
LNG, seeking to remove destination restrictions but has been
facing an uphill battle amid a lack of support like that from
the European Commission, which ruled the clauses infringe
Now, Japan's Fair Trade Commission is exchanging information
with the government on destination clauses.
"We would be happy if Japan offered a similar judgment like
in Europe," he added.
(Editing by William Hardy)