Japanese companies sign multi-year deals to import LNG from US and Oman

Top energy companies from Japan have signed several agreements to secure liquefied natural gas (LNG) supplies, according to senior energy officials.

Japanese electricity generator JERA, and trading houses Mitsui & Co and Itochu Corp signed supply agreements with Oman LNG for a total of 2.35 million tonnes per year, state news agency ONA reported on Tuesday.

JERA, Japan’s biggest importer of LNG, said it had signed a key term sheet with Oman LNG to buy up to 12 cargoes, or about 0.8 million tonnes of LNG per year for 10 years, beginning from 2025, Reuters reported.

The basic agreement was signed in Oman, in the presence of Japan's industry minister Nishimura Yasutoshi, and comes amid a global shortage of LNG due to the Ukraine conflict.

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, JERA 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,” the power company said in a statement.

Oman is a strategic partner for Japan’s energy security, and Japan’s LNG imports from Oman currently stand at over 1.9 million tons per year, accounting for 2.6 percent of its imports of the energy source. Mitsui and Itochu also have stakes in Oman’s LNG projects.

Separately, Japan’s top oil and gas explorer Inpex announced on Tuesday a 20-year deal with US-based Venture Global LNG to import 1 million tonnes per year. The import will be from the company’s Louisiana project due to begin construction in 2023.

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