QatarEnergy in talks with Japan on long-term LNG supply deal

By Marwa Rashad, Emily Chow, Yuka Obayashi and Maha El Dahan

LONDON/SINGAPORE (Reuters) -One of the world's biggest liquefied natural gas suppliers, QatarEnergy, is in talks with Japanese firms for a long-term deal to supply LNG from its North Field expansion project, five trading and industry sources told Reuters. 

Under the deal, Qatar would supply a consortium of Japanese importers, and a volume of at least 3 million metric tons per annum of gas would be split between them, four of the sources said.

If agreed, it would help to confirm Doha's decades-old dominance of the Japanese market, as competition intensifies from the United States and from neighbouring Gulf suppliers, the United Arab Emirates and Oman, that offer more flexible contract terms.  

It would also be the first deal since Reuters reported in October that Qatar was finding it hard to agree to LNG term deals with east Asian buyers in Japan and South Korea due to competition.

The buyers in talks with QatarEnergy include JERA, Japan's largest power generator and trading house Mitsui & Co, said four of the sources, who declined to be identified as they were not authorised to speak to the media. 

QatarEnergy did not immediately respond to a Reuters request for comment, while JERA said it is in discussions with various suppliers for LNG procurement. It recognised Qatar as an important supplier, but said it would not disclose specific details of its discussions.

At an earnings briefing on Monday, a JERA executive said the company needed to diversify its sources of supply.

"Asia-Oceania currently accounts for more than half of our procurement sources. For supply stability, expanding options to regions like North America and the Middle East would be beneficial," Naohiro Maekawa, head of the financial strategy and planning division, said. 

When asked if the company is in talks with QatarEnergy over a long-term LNG contract, Mitsui said it is in discussions with various sellers to ensure stable LNG supply, but would not provide details of individual discussions.

NORTH FIELD EXPANSION

Qatar was the third largest LNG exporter globally after the U.S. and Australia last year, exporting 79.54 million metric tons of LNG in 2024, according to data from analytics firm Kpler.

The Middle Eastern country is planning for an 85% expansion in LNG output from its North Field's current 77 million tons per annum to 142 mtpa by 2030, from a previously expected 126 mtpa.

Japan is the world's second biggest LNG buyer after China, with its trade data showing imports of 65.89 million tons of the fuel last year. 

Qatar had been among Japan's top three LNG suppliers a decade ago, shipping over 15-16 mtpa to the East Asian country between 2012-2014. 

The surge followed Qatar's support in ramping up LNG exports after the 2011 earthquake and tsunami triggered the Fukushima nuclear disaster, leading to the gradual shutdown of all Japanese nuclear reactors.

But those volumes have since shrunk, as Japan's nuclear reactors have slowly restarted. JERA also chose not to renew its long-term contract with Qatar for 5.5 mtpa, which expired at the end of 2021. Qatar exported just under 3 million tons to Japan last year, Kpler data showed.

A senior JERA executive told Reuters in January that his company planned to increase its LNG purchases from the United States to diversify its supply and meet demand growth spurred by data centres and AI and also plans to talk to suppliers in the Middle East to help diversify its suppliers.

(Reporting by Marwa Rashad in London, Emily Chow in Singapore, Yuka Obayashi in Tokyo and Maha El Dahan in Dubai; Editing by Nina Chestney and Barbara Lewis)