Gas buyers seek better deals
tokyo — As Qatar grapples with deepening diplomatic isolation, Japanese liquefied natural gas buyers are pushing the world’s largest seller for cheaper supplies.
Both Jera Co, one of the biggest LNG purchasers, and Tokyo Gas Co haven’t decided if they’ll sign new deals with Qatar to replace current contracts that begin expiring in 2021, according to executives from both companies. The buyers are insisting on less-expensive cargoes and greater purchasing flexibility from the Middle East nation, which relies on oil and gas for about half its gross domestic product.
The demands from Japan, its largest LNG customer, may add pressure on Qatar after neighbours including Saudi Arabia severed diplomatic ties and cut travel by land, sea and air. The hardnosed bargaining tactics aren’t related to the diplomatic tensions, but the result of a global LNG glut that’s forcing producers to offer concessions, which sellers such as Total SA and Anadarko Petroleum Corp signal may be necessary to lock up customers.
“LNG buyers believe the position of suppliers like Qatar are weakening and they are demanding more contractual flexibility,” said Junzo Tamamizu, managing partner at consulting and advisory firm Clavis Energy Partners in Tokyo. “But if the market flips to a shortfall, buyers won’t be able to make the same demands.”
Qatargas, a division of state-run Qatar Petroleum, didn’t respond to a request for comment. — Bloomberg