LNG trio testing waters
Korea, China, and Japan, which import half of all liquefied natural gas (LNG) in the world, is all set to launch an LNG buyers' club, says a report in Business Korea. Recently top companies from these three countries -KOGAS of Korea, CNOOC of China and JERA of Japan - signed an MOU on LNG business cooperation. Reuters reported that the trio of Asian LNG buyers testing their collective muscle in a push for more flexible long-term contracts for the fuel. Trio is attempting to cement a shift in power from producers to importers amid a supply glut that is expected to persist into the early-2020s. The report said that developing responses from LNG producers to the group's alliance may also soon start to give clues as to who will win advantage as the fuel surplus puts pressure on suppliers to give buyers greater contractual freedom. According to an official of KOGAS, Korean, Chinese and Japanese firms with big buying power will build partnership to enhance their negotiation power in purchasing LNG. If the three countries take the first step towards cooperation, the Korean government will also try to persuade China, which has relatively weak cooperative relations with Korea. Korea, China and Japan import 55.54% of total LNG in the world. But the absence of this cooperation has weakened their negotiation power. The alliance of three big buyers across three countries will put pressure on exporters such as Qatar, Australia and Malaysia.