Japanese companies have agreed to purchase more liquefied natural gas (LNG) from the U.S. and Oman in the latest move to secure fuel supplies and avoid future shortages.
Inpex, the nation’s top gas explorer, has inked a deal to procure 1 million tons a year from Venture Global LNG’s CP2 export project in Louisiana for 20 years. CP2 is slated to begin construction next year, according to Venture Global.
Several firms, including Mitsui & Co., Itochu, and Jera, the nation’s top power producer, will enter an agreement with Oman to buy an additional 2 million tons or so a year from 2025 for 10 years, NHK said Tuesday. Bloomberg previously reported that Mitsui had been shortlisted by Oman.
The deals come as the government reevaluates how it can enhance energy security in the face of a fuel crunch at home. 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 that had been moving away from long-term deals on the expectation that a transition to cleaner energy sources would reduce gas demand this decade. Companies had instead been increasing dependence on the short-term spot market to secure LNG supplies.
However, with the spot market tight and prices near a record high, the firms are now reversing course and locking in supply for years at more attractive rates.
A Mitsui spokesperson said the trading company was involved in the deal reported by NHK, but declined to comment further. A 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.