NEW DELHI: Union Minister of Petroleum and Natural Gas Dharmendra Pradhan on Wednesday signed a Memorandum of Cooperation on liquefied natural gas (LNG) with Japan’s ministry of economy, trade and industry. He also pressed for the supply of LNG at ‘reasonable prices’. As per the agreement, both countries will cooperate in facilitating flexibility in LNG contracts, and abolition of ‘destination restriction’ clause.
The destination restriction clause bars the buyer from reselling the LNG outside of a designated geographic market (usually, the buyer’s home market). A major clause of the agreement provides for both countries to explore possibilities of cooperation in establishing reliable LNG spot price indices reflecting true LNG demand and supply. This will help promote bilateral relationship between India and Japan in the LNG sector, according to a statement from the Ministry of Petroleum and Natural Gas.
Delivering a keynote address at the LNG Producer-Consumer Conference in Tokyo on Wednesday, Pradhan stressed that reforms are essential for developing a transparent, efficient, truly global and balanced LNG market.
“The global LNG market is undergoing a major transformation driven by new supplies, which has created a situation of oversupply,” a government released quoted the minister as saying. Pradhan urged global LNG market players to “design flexible terms such as pricing review, flexible take or pay, and abolition of destination restriction clause in the LNG contracts”. During the meeting with Hiroshige Seko, Minister of Economy, Trade, and Industry of Japan, Pradhan discussed the ongoing cooperation in the hydrocarbon sector between companies in India and abroad and explored ways to further enhance the engagement.
India and Japan are major consumers of energy in the world. In the LNG sector, Japan is the world’s largest importer and India is the fourth largest.
Both countries will explore joint cooperation in the areas of LNG sourcing, swapping and optimisation of LNG sources and commercial exploitation of methane hydrates.Pradhan invited Minister Seko to attend the 16th International Energy Forum ministerial meeting to be held in New Delhi during April 2018.
Pact on LNG
Both India and Japan will cooperate in facilitating flexibility in LNG contracts, and abolition of ‘destination restriction’ clause
A major clause of the agreement provides for both countries to explore possibilities of cooperation in establishing reliable LNG spot price indices reflecting true LNG demand and supply