Oil-linked LNG not reasonable, says Japan Gas Association

Japanese buyer wants imports linked to gas hub prices, rejects argument for oil-indexation

Japanese gas importers want to buy liquefied natural gas (LNG) linked to US or European gas hub prices and move away from traditional oil-linked contracts, the Japan Gas Association told reporters at the WGC2012.The world’s largest LNG importer buys most of its gas on oil-linked contracts, but soaring demand after the Fukushima Daiichi disaster last year and high crude prices means Japanese customers are paying up to seven times more compared to US gas prices.“For the natural gas price to be linked to the oil price right now has lost any economic rationale,” Japan Gas Association chairman Mitsunori Torihara said.“Looking at the main uses of natural gas right now, it’s for power generation an