Three Japan companies sign agreements for 2.35 mil mt/yr Oman LNG supply from 2025: METI minister

Three Japanese companies have signed basic agreements to buy around 2.35 million mt/year of LNG with Oman Liquefied Natural Gas for about 10 years from 2025 under prospective deals that would significantly contribute Japan's energy security, Minister of Economy, Trade and Industry Yasutoshi Nishimura said Dec. 27.

"Oman LNG has a strong advantage for stable supply because it does not transit the Strait of Hormuz so that it gets relatively less impacted from geopolitical situations," Nishimura told a press conference in Muscat, where he had met Oman's energy minister Salim al Aufi and Sultan Haitham bin Tariq al-Said.

"Around 2.35 million mt[/year of LNG supply] for around 10 years from 2025 also means important LNG deals as [Japan] proceeds smooth transition to clean energy for the 2050 carbon neutrality target."

Nishimura also added that these Oman LNG deals would lead to stable long-term imports with a stable price.

Considering the tight LNG supply and demand balance globally in coming years, "[these agreements] have very great significance for our country's energy security because we have got an outlook of securing LNG with a both stable volume and price."

The 2.35 million mt/year of prospective Oman LNG supply represents more than Japan's imports of about 1.9 million mt of LNG from Oman in 2021.

Nishimura's comments came after official news agency Oman News Agency reported earlier in the day that Oman LNG Co. signed agreements with Mitsui, Itochu and JERA with the aim of producing and delivering LNG to the Japanese companies starting in 2025.

Under the agreement, Oman LNG will deliver to the Japanese companies about 2.35 million mt/year of LNG in contracts ranging between five and 10 years.

Possibly more

Japan's largest power generation company JERA said separately Dec. 27 it has signed a key term sheet for the sale and purchase of LNG with Oman Liquefied Natural Gas for up to 12 cargoes or 0.8 million mt/year of LNG on a FOB basis from the Oman LNG project for 10 years from 2025.

A Mitsui spokesperson confirmed its signing of a key term sheet for the sale and purchase of Oman LNG but declined to elaborate on terms of its deal. Itochu was not immediately available to comment.

A METI official described the Oman LNG deals as the first result of resource diplomacy in a long time, with Nishimura having directly approached Oman's energy minister Aufi since autumn.

"The [over] 2 million mt to three companies were volumes contracted to date, and there is a good chance of increasing further after the new year with a few other prospective companies," the METI official told S&P Global Commodity Insights.

The Japanese companies' procurement of over 2 million mt/year of Oman LNG procurements is part of the Middle East producer's ongoing 11 million mt/year LNG tender.

The sultanate of Oman and Japan also signed an extension of a memorandum of understanding in the field of crude oil, natural gas and clean energy, and a memorandum of cooperation in the fields of hydrogen, ammonia fuel, carbon recycling and modern methods of methane production, Oman News Agency reported.