Japan's JERA to buy up to 1.2 million tonnes per year of LNG from Canada project

The logo of JERA Co., Inc., the world's biggest LNG buyer, is displayed at the company office in Tokyo, Japan July 14, 2017. REUTERS/Issei Kato

TOKYO (Reuters) - Japan’s JERA, the world’s top buyer of liquefied natural gas, on Tuesday said it had signed an agreement with a Mitsubishi Corp unit to buy up to 16 cargoes, or 1.2 million tonnes per annum (mtpa), of LNG from the LNG Canada project.

The heads of agreement (HOA) signed between JERA and Diamond Gas International is for about 15 years from the business year starting from April 2024, said JERA, a joint venture between Tokyo Electric Power and Chubu Electric Power.

The deal will be the first time JERA procures LNG from Canada, it said in a statement.

JERA also said that the agreement was in line with the Japan Fair Trade Commission ruling in June 2017, which declared so-called destination restriction clauses to be anti-competitive and called for destination flexibility in LNG contracts.

The C$40 billion ($30 billion) LNG Canada project led by Royal Dutch Shell was given the go-ahead by the Anglo-Dutch giant and its partners in October last year, making it the fuel’s first major new project to win approval in recent years.[IDnL8N1Y436B]

Buyers from the project so far include trading house Vitol as well as Asian utilities such as Tokyo Gas, Toho Gas and Korea Gas Corp (Kogas).

Reporting by Yuka Obayashi in TOKYO; Additional reporting by Jessica Jaganathan in SINGAPORE; Editing by Richard Pullin and Joseph Radford