India Looking to Work With Japan on LNG Procurement

The Indian cabinet, chaired by prime minister Narendra Modi, has approved the signing of a Memorandum of Cooperation (MoC) between India and Japan that establishes a liquid, flexible and global LNG market.

“The MoC will promote a bilateral relationship between India and Japan in the energy sector. It will contribute to the diversification of gas supplies for India. This will strengthen our energy security and lead to more competitive prices for consumers,” the Indian government said on October 11.

The MoC provides a framework to facilitate flexibility in LNG contracts, the abolition of the destination restriction clause and explore possibilities of cooperation in establishing reliable LNG spot price indices that reflect true demand and supply for LNG.

Following the signing of the MoC, the Indian minister of Petroleum and Natural Gas Dharmendra Pradhan said on Twitter that the agreement will contribute to "the diversification of gas supplies for India and strengthen our energy security and lead to more competitive prices."

India and Japan are major consumers of energy. In the LNG sector, Japan is the world's largest importer and India the fourth-largest. Under the Japan-India Energy Partnership Initiative signed in January 2016 the two sides agreed to work together to promote well-functioning energy markets and a transparent and diversified LNG market through the relaxation of the destination restriction clause.

Shardul Sharma