QatarEnergy in talks with Japan on long-term LNG supply

• Deal would reaffirm Doha’s dominance
• Increased competition makes deals harder
• Jera and Mitsui in talks, sources say

One of the world’s biggest liquefied natural gas suppliers, QatarEnergy, is in talks with Japanese firms for a long-term deal to supply LNG from its North Field expansion project, five trading and industry sources told Reuters.

Under the deal, Qatar would supply a consortium of Japanese importers and a volume of at least 3 million metric tons per annum of gas would be split between them, four of the sources said.

If agreed, it would help to confirm Doha’s decades-old dominance of the Japanese market, as competition intensifies from the United States and from neighbouring Gulf suppliers, the UAE and Oman, that offer more flexible contract terms.

It would also be the first deal since Reuters reported in October that Qatar was finding it hard to agree to LNG term deals with east Asian buyers in Japan and South Korea due to competition.

The buyers in talks with QatarEnergy include Jera, Japan’s largest power generator and trading house Mitsui & Co, said four of the sources, who declined to be identified as they were not authorised to speak to the media.

QatarEnergy did not immediately respond to a Reuters request for comment, while Jera said it is in discussions with various suppliers for LNG procurement. It recognised Qatar as an important supplier, but said it would not disclose specific details of its discussions.

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At an earnings briefing on Monday, a Jera executive said the company needed to diversify its sources of supply.

“Asia-Oceania currently accounts for more than half of our procurement sources. For supply stability, expanding options to regions like North America and the Middle East would be beneficial,” Naohiro Maekawa, head of the financial strategy and planning division, said.

When asked if the company is in talks with QatarEnergy over a long-term LNG contract, Mitsui said it is in discussions with various sellers to ensure stable LNG supply, but would not provide details of individual discussions.