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Results of the first comprehensive survey on the destination restrictions in LNG SPAs
Results of the first comprehensive survey on the destination restrictions in LNG SPAs
PDF version of this page (264 KB)October 5, 2021
JOGMEC conducted a survey on the current status of the destination restrictions in LNG sales and purchase agreements with the fully cooperation of 22 Japanese LNG buyers, and published the results on 5th October, 2021 on the website. The Japan Fair Trade Commission conducted a survey in June 2017, and this is the first comprehensive survey to cover all LNG buyers in Japan. JOGMEC will continue its efforts to improve the flexibility and liquidity of the LNG market in order to enhance energy security.
This survey was conducted in accordance with the "New International Resources Strategy" formulated in March 2020 by the Ministry of Economy, Trade and Industry (METI), with the aim of following up the contract terms and conditions related to destination restrictions in fixed-term LNG sales and purchase agreements since the Japan Fair Trade Commission's "Survey on LNG Trades" published in June 2017(JFTC Survey) in view of abolishment or relaxation of destination clauses, which cause a concern for LNG security.
As a result of our survey, with respect to contracted quantity in FY 2020, 71% of contracts concluded before the JFTC Survey in June 2017 imposed destination restrictions, while 57% of all contracts, including those newly concluded after the JFTC Survey, imposed destination restrictions. In addition, 23% of the contracts newly concluded after the JFTC Survey and existing contracts revised after the JFTC Survey regarding destination restrictions had destination restrictions.
As a result of our survey, with respect to contracted quantity in FY 2020, 71% of contracts concluded before the JFTC Survey in June 2017 imposed destination restrictions, while 57% of all contracts, including those newly concluded after the JFTC Survey, imposed destination restrictions. In addition, 23% of the contracts newly concluded after the JFTC Survey and existing contracts revised after the JFTC Survey regarding destination restrictions had destination restrictions.
Figure: Comparison of the contract quantity with destination restrictions imposed before and after the JFTC Survey in June 2017
For more information, please visit our "Natural Gas and LNG Related Information".
Destination clauses
According to the JFTC Survey, destination clauses mean the clauses that designate a list of unloading terminals as destination ports of LNG ships. In the JFTC Survey, JFTC defines destination restrictions as a certain extent of restrictions on buyers in free designation and diversion of destination and points out that if the destination restrictions exclude or lessen new entrants and trading opportunities, such conduct is, in principle, in violation of the Antimonopoly Act.
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