By Jane Chung, Yuka Obayashi and Oleg Vukmanovic | SEOUL/TOKYO/MILAN The world’s biggest liquefied natural gas (LNG) buyers, all in Asia, are clubbing together to secure more flexible supply contracts in a move which shifts power to importers from producers as oversupply grows. Korea Gas Corp (KOGAS) said on Thursday it had signed a memorandum of understanding in mid-March with Japan’s JERA and China National Offshore Oil Corp (CNOOC) to exchange information and “cooperate in the joint procurement of LNG.” Together, the three companies purchase a third of global LNG production, giving them a strong hand to challenge restrictive contract terms that have squeezed buyers’ finances. Influential buyers’ clubs are largely unheard of in commodity markets where it is the producers, such as the Organisation of Petroleum Exporting Countries (OPEC), who wield power, enforcing production quotas to manage prices. A painful period of high LNG prices before 2014 left Asian importers scrambling to contain losses and led to the first talks between India, Japan, South Korea, China and Taiwan about joint purchases. Several joint LNG-buying deals have been set up since then but none approach the scale of the latest agreement, which is the first involving the game’s biggest players.
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Source: CTRM Center