Japanese firms sign multi-year agreements to buy LNG from Oman, US

Japanese companies inked several deals on Tuesday to receive liquefied natural gas (LNG) supplies, with a preliminary agreement lasting up to 10 years with Oman LNG and a 20-year deal with US-based Venture Global.

LNG supply has been tight since Russia invaded Ukraine and cut gas supply flows to Europe, leading European nations to import record amounts of LNG cargoes, straining global supplies and elevating prices.

Top Japanese electricity generator JERA and trading houses Mitsui & Co 8031.T and Itochu Corp 8001.T signed binding term sheet agreements with Oman LNG for a total of 2.35 million tonnes per year starting in 2025,Oman LNG said on Twitter on Tuesday night.

Oman LNG gave the supply breakdown as 800,000 tonnes per year to JERA and Itochu, while Mitsui will take 750,000 tonnes per year.

Those figures backed up a statement earlier on Tuesday from JERA, Japan's LNG biggest importer of LNG, that said it signed a key term sheet with Oman LNG to buy up to 12 cargoes, or about 800,000 tonnes per year for 10 years, beginning from 2025.

The contract, signed on a free-on-board basis, offered "high flexibility" and was expected to help Japan better respond to uncertainties with domestic LNG supply and demand, the power company said.

"LNG procurement competition has been intensifying and thus, stable procurement of fuel in a timely manner in line with the domestic electricity supply-demand situation is needed to secure a stable supply of energy in Japan," JERA said.

Mitsui and Itochu confirmed signing the agreements with Oman LNG, but declined to give details.

Itochu, which has a 20-year contract with Oman LNG to buy 700,000 tonnes per year of LNG that will expire in 2025, will continue discussions with the seller to set details, a company spokesperson said.

GREATER ENERGY SECURITY

The statements followed a report by Japanese broadcaster NHK that all three companies would secure a total of about 2 million tonnes of LNG annually from Oman over 10 years beginning in 2025.

Other Japanese companies were also in talks with Oman LNG about term contracts, a government official told Reuters without naming the firms. If successful, they could take Japan's LNG imports from Oman to above 3 million tonnes a year, he added.

The agreements with Oman LNG were signed during a visit to Oman by Japanese industry minister Yasutoshi Nishimura.

Separately, Japan's top oil and gas explorer Inpex Corp 1605.Tannounced on Tuesday a 20-year deal with US-based Venture Global LNG to import 1 million tonnes per year from the firm's Louisiana project due to begin construction in 2023.

The new supplies could help Japan diversify from Russia's Sakhalin project which accounts for 9% of Japan's total LNG imports of 74.3 million tonnes per year.

Last year, Japan imported 1.9 million tonnes of LNG from Oman, 2.6% of its total imports, and 7.1 million tonnes from the United States, accounting for 9.5% of its total imports.