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LNG: LNG Buyers Seek More Supply Flexibility Amid Variable Power Demand

LNG
Energy BulletsBulletPower BulletsCommodities

LNG buyers including Japan are calling for more supply flexibility to adapt to increasingly variable and less predictable power demand, according to Reuters. Supply diversification is seen as key to managing fluctuating demand while intermediaries can bridge the gap between buyers and sellers.

  • LNG suppliers such as Qatar prefer long-term contracts to secure project financing, but buyers are seeking shorter term contracts with flexibility to enable resales at times of low demand.
  • "What we are looking for is flexibility in both our long- and short-term contracts in order to manage the uncertainties we face," said Jonathan Westby at Japan's JERA Global Markets.
  • Jera buys and sells LNG depending variable power demand due to weather and nuclear power availability. Nuclear power accounted for 9% of Japan's power generation mix last year as reactor restarts contributed to an 8% fall in LNG imports. Demand in China fluctuates between summer and winter and by region.
  • LNG supplier Mexico Pacific said, “existing producers and portfolio suppliers are warming up to flexible contract structures," but "for new projects, we still need 15-20 year commitments to meet project financing requirements."
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LNG buyers including Japan are calling for more supply flexibility to adapt to increasingly variable and less predictable power demand, according to Reuters. Supply diversification is seen as key to managing fluctuating demand while intermediaries can bridge the gap between buyers and sellers.

  • LNG suppliers such as Qatar prefer long-term contracts to secure project financing, but buyers are seeking shorter term contracts with flexibility to enable resales at times of low demand.
  • "What we are looking for is flexibility in both our long- and short-term contracts in order to manage the uncertainties we face," said Jonathan Westby at Japan's JERA Global Markets.
  • Jera buys and sells LNG depending variable power demand due to weather and nuclear power availability. Nuclear power accounted for 9% of Japan's power generation mix last year as reactor restarts contributed to an 8% fall in LNG imports. Demand in China fluctuates between summer and winter and by region.
  • LNG supplier Mexico Pacific said, “existing producers and portfolio suppliers are warming up to flexible contract structures," but "for new projects, we still need 15-20 year commitments to meet project financing requirements."