LNG buyers have not asked Inpex to revise destination clauses

TOKYO, Aug 4 (Reuters) - Buyers of long-term liquefied natural gas contracts have not asked Japan’s Inpex Corp to revise their destination clauses after the country’s watchdog urged a revision of anti-competitive practices in contracts that restrict sales to third parties, its senior executive said on Friday.

Japan’s Fair Trade Commission (FTC) ruled in late June that new long-term LNG contracts signed with Japanese buyers could not have destination restrictions, and urged buyers to try to revise existing contracts to remove anti-competitive practices at an early date.

Asian LNG buyers have long complained that having destination clauses in LNG contracts unfairly restricts trading of the fuel at times when it would make more economic sense for buyers to on-sell supplies to other markets.

JERA Co, the world’s biggest importer of the fuel, has since then contacted buyers and they have been told that some sellers are open to removing destination.

Other Japanese buyers are also looking to change their contracts. Tokyo Gas, the country’s biggest city-gas buyer, is also seeking more flexibility in its new contracts.

Despite this background, Inpex, Japan’s top oil and gas producer, has not been contacted by its long-term LNG buyers to renegotiate existing contracts, Inpex’s Senior Managing Executive Officer Masahiro Murayama said on Friday.

“We have already given a significant freehand contractually to buyers in our Ichthys (LNG) sales,” he told reporters during the firm’s first-quarter earnings.

“We were not that stuck on destination clauses from the beginning,” said. “I think we have signed contracts with significantly high freedom. But the matter is whether that’s enough, and taking into account the situation sincerely, we are open to a changing it if a change is due.”

Murayama later told Reuters after the briefing its LNG contracts are not completely destination-free but that he thinks they have been signed with fairness for buyers. (Reporting by Osamu Tsukimori, editing by David Evans)