Tokyo Gas signs contract with flexibility in destination clauses
Category: #world  By Saipriya Iyer  Date: 2018-03-15
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Tokyo Gas signs contract with flexibility in destination clauses

The Tokyo Gas Company Limited has reportedly signed a long-term contract to purchase LNG from an establishment of the Malaysia based State Oil firm Petronas with flexible destination clauses. Reports cite that the terms & conditions stated in the contract have defined destination clauses that fulfill Japan’s anti-trust body legislations. According to the company sources, the agreement will be the Japanese firm’s first long-term pact post JFTC (Japan Fair Trade Commission) verdict during the first half of 2017 that proved the destination clauses to be a hindrance to the competition.

The ruling stated that destination clauses prevented the buyers from reselling LNG in FOB pacts and claimed them to be unconstitutional as they violated Japan’s Antimonopoly Act. JFTC also ruled that as per the DES transaction, the provision for sellers to unreasonably refuse the purchaser’s request for diversion is an act of violation. The key officials of Tokyo Gas Company Limited have stated that as per the new agreement, it can divert the volumes of LNG for the purpose of resale.

Earlier in January this year, Takashi Uchida, the President-Elect of Tokyo Gas had decided to reduce the volumes of LNG imports from Malaysia after its 15-year-old deal to purchase 2.6 million tons of LNG per year from the country culminates in March this year. As per the company officials, Tokyo Gas will purchase LNG from Malaysia for nearly thirteen years as per its new contract.

Tokyo Gas has also stated that as per the new pact it will import nearly 500,000 tons of LNG every year from Malaysia during the first six years and 900,000 tons of natural gas each year during the rest of the remaining seven years. For the record, the Japanese natural gas firm used to procure LNG from the Satu Project in Malaysia since 1983.

According to Reuters, the Japan-based firm currently has three long-term agreements with Malaysia, with the first contract expiring this year and the other two contracts ending in 2024 & 2025 respectively.



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Saipriya Iyer

Email: [email protected]izeforecasters.com   

Saipriya Iyer

Saipriya Iyer develops content for Market Size Forecasters, Algosonline, and myriad other platforms. A computer engineer by profession, she ventured into the field of writing for the love of playing with words. Having had a previous experience of 3 years under her bel...

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