To Secure Fuel Supply, Japan Agreed On LNG Deals With US and Oman

CP2 is slated to begin construction next year.

On Tuesday, NHK stated that several Japanese companies, including Mitsui & Co., Itochu Corp., and the nation’s top power producer Jera Co., will enter into an agreement with Oman to purchase an additional 2 million tonnes or so a year from 2025 for 10 years.

Oman had previously shortlisted Mitsui, according to Bloomberg.

The report mentioned that "the deals come as Japan’s government is reevaluating how it can enhance energy security in the face of a fuel crunch at home,"  and added that global LNG supply is slated to remain tight for years, which threatens to increase import costs and add to rising inflation.

This also marks a shift for Japanese LNG importers, which had been moving away from long-term deals on the expectation that the transition to cleaner energy sources would reduce gas demand this decade.

Companies were instead increasing their dependence on the short-term spot market to secure LNG supplies.

However, with the spot market tight and prices nearing a record high, Japanese firms are now reversing course and locking in supply for years at more appealing rates, according to the report.

A Mitsui spokesperson said the trading company was involved in the deal reported by NHK but declined to comment further.

Hiroyuki Usami, spokesperson for Itochu, declined to give details in an emailed comment but said the firm will continue negotiations on long-term contracts for LNG with Oman to support Japan’s energy security.

By Sumita Pawar