Japan’s utilities, buyers of liquefied natural gas are seeking diversified LNG price indexation to alleviate the risk energy deregulation’s effect brings to downstream demand and pricing.
Yuki Sadamitsu director of oil and gas division at Japan’s ministry of economy, trade and industry said the utilities are looking to purchase more LNG, however, buyers are seeking flexible terms, duration and volumes, Platts reports.
Future gas and power market liberalization and a subdued sales growth have pushed the utilities to revise the way they procure liquefied natural gas.
Besides flexible contract terms, Sadamitsu added the companies are targeting a diversification of price indices, combining JLC (Japan LNG Cocktail) or JKM (Japan Korea Marker) in addition to the JCC (Japan Crude Cocktail).
The retail electricity market in Japan is set for liberalization in April 2016 while the retail gas market is scheduled to follow in 2017. This is an attempt of the Japanese government to ensure supply security, increase competition and subsequently, reduce electricity costs.
LNG World News Staff