Kogas, Japan firm jointly buy gas

State-run Korea Gas Corporation (Kogas) and a Japanese company bought natural gas jointly yesterday and such rare cooperative purchases will become more common, the head of state-run Japan Oil, Gas and Metals National Corporation (Jogmec) said.

The world’s top two buyers Japan and Korea, along with China and other Asian gas importers, have been unhappy about paying higher prices than the United States and Europe due to strong regional demand. Asian buyers took about 70 percent of global liquefied natural gas (LNG) exports last year.

Besides earlier talks between Japan’s Chubu Electric Power and India’s gas utility GAIL on a joint purchase, Asian buyers have also been discussing forming a gas buying group to command better contract terms and pricing.

Asked about progress in forming a gas buyers’ club, Hirobumi Kawano, president of Jogmec told Reuters in an interview: “We know there is a discussion. Maybe that will happen.”

He provided no further details on Monday’s joint deal and did not identify the Japanese company.

“This kind of activity will increase for getting cheaper prices and strengthening bargaining positions,” said Kawano, who is in Korea this week for an international gas conference.

Spot LNG prices in Asia are running around $18 per million British thermal units (mmBtu), including processing and shipping costs, against U.S. prices of around $4.35 per mmBtu.

A spokesman at Kogas, the world’s largest corporate buyer of LNG, said he had no knowledge of the joint deal.

Reuters