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Japan in talks to buy gas from Qatar amid diversification shift

06 July 2023 15:40

Japan’s natural gas buyers are in talks to agree new supply contracts with Qatar, driven by energy security concerns.

Several Japanese companies are in negotiations for deals spanning decades to purchase liquefied natural gas from the producer, which is expanding output, according to people with knowledge of the matter, Bloomberg reports. 

Qatar is currently offering prices that the Japanese firms deem as too high, a key issue that may ultimately scuttle discussions, said the people, who asked not to be named as the details are private.

State-owned QatarEnergy didn’t respond to an emailed request for comment. 

The deals would be a change in strategy for Japan’s LNG importers, who haven’t signed a contract with Qatar since 2014, amid an effort to shift to more flexible exporters. Qatar’s contracts are among the industry’s most rigid, and don’t allow for easy resale or diversion to other countries if the shipment isn’t needed at home.

Renewed interest in Qatar comes after last year’s energy crisis prompted Japan’s government to urge buyers to lock in supply and invest in projects to avoid future shortages. At the Group of Seven summit earlier this year, Japan and Germany pushed for the inclusion of language that left the door open for public investment in gas.

Prime Minister Fumio Kishida plans to go to Qatar this month, the first visit in 10 years by a Japanese premier.

Japan’s LNG relationship with Qatar began to sour two years ago. Jera Co., Japan’s top LNG importer, didn’t renew 5.5 million tons per year worth of contracts with the Middle Eastern country when they expired in 2021. That represented almost half of Japan’s deals with Qatar.

Subsequently, Qatar’s LNG deliveries to Japan dropped by more than 60 per cent in 2022, according to ship-tracking data compiled by Bloomberg. Jera has meanwhile signed contracts with exporters in Oman and the US in the last year.

The return of Japan would benefit Qatar, which must offload a large overhang of supply from its expansion project, which will boost the nation’s export capacity by 60 per cent through 2027. China’s state-owned importers recently agreed to some of the industry’s longest contracts with Qatar, as well as making investments in the expansion.

 

Caliber.Az
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