Japan's review of the legality of destination restriction clauses in long-term contracts has set the LNG marketplace alight. The burning question is whether, after the review by the Japan Fair Trade Commission (JFTC), Tokyo will follow the European Commission in outlawing the clause in existing as well as new contracts. Japan is the world's biggest LNG buyer, accounting for more than 30% of the market, and the move would boost liquidity and potentially lead to a massive renegotiation of contracts. Its Ministry of Economy, Trade and Industry will likely use next month's LNG Producer-Consumer conference in Tokyo to reiterate to suppliers the need to abolish or relax the restrictions. The JFTC is expected to complete the review in late 2016 or 2017, and Japanese buyers may hold off on signing new contracts until there is clarity.
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