HONG KONG—Australian energy major Woodside Petroleum on March 29 hinted it may in the future be willing to allow buyers of LNG more flexibility as part of long-term contracts, saying that in time this could help create a more liquid market.
Last week, the biggest buyers in the world’s top three LNG consuming countries—Japan, South Korea and China—joined to secure greater supply flexibility.
The move potentially shifts power to importers amid a growing surplus, adding pressure on producers like Woodside and peers Royal Dutch Shell, Chevron and Exxon Mobil to grant more flexible contracts.
Speaking as one of the first executives of a major LNG producer to address the buyers’ alliance, Woodside’s Chief Executive Peter Coleman said he did not see a threat from the new grouping.
“We are OK with it, we don’t see a threat from it at all,” he told Reuters in Hong Kong.
The main goal of the buyers’ alliance—made up Japan’s JERA, Korea Gas Corp (KOGAS) and China National Offshore Oil Corp (CNOOC)—is to rid themselves of long-term contracts that oblige them to take in a fixed amount of cargoes every month and which do not allow them to sell excess cargoes to third parties.
Coleman did not specifically say Woodside was willing to grant buyers more flexibility in future, but said that to “cooperate and move things around” was a sensible thing to do for the big LNG buyers.
“It actually helps create more liquidity in the market place, because you have a large volume of LNG moving through the three different market players,” he said.
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