India-Japan to push for removal of destination clause in LNG contracts

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New Delhi, Jan 14:

India and Japan have agreed to work together to promote a transparent and diversified LNG market by pushing for the relaxation of the destination clause in long-term supply contracts for the fuel.

This was decided at the 8th India-Japan Energy Dialogue being held in Tokyo. India is being represented by Piyush Goyal, Minister of State (Independent Charge) Power, Coal and New & Renewable Energy, while Japan’s representative to the dialogue is Motoo Hayashi, Minister of Economy, Trade and Industry.

Destination clauses in long-term LNG contracts restrict where the shipments of gas can be unloaded and prevent the buyers from selling excess cargoes.

Japan, in particular, has been vocal about the removal of the destination clause.

In the field of LNG, India and Japan also agreed to enhance the security of oil and gas supply by close communication and progress of ongoing initiatives such as joint procurement of LNG.

The two sides also agreed to continue collaboration in the area of gas hydrates.

The two sides also agreed to conduct feasibility studies to adopt the Japanese Ultra Super Critical technology in the Badarpur thermal power plant, the Barauni thermal plant, and to make a new plant in Srikakulam, Andhra Pradesh.

Goyal and Hayashi also agreed to create a Japan-India Energy Storage Taskforce to identify appropriate policies and measures to deploy energy storage technologies in India. The taskforce will also explore the possibility of developing high-end, cost-effective energy storage pilot projects in India.

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