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Apr 11, 2017

Territorial Restrictions in Gas Supply Contracts in Japan – Antitrust Implications and Experience from the European Union

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Japan, the world’s biggest buyer of liquefied natural gas (“LNG”), is currently investigating the potential anticompetitive effects of territorial restrictions in LNG supply contracts. Historically, LNG suppliers have used long-term contracts that incorporate territorial restrictions to prevent Japanese buyers from on-selling the LNG outside Japan. The effect of such clauses is to ban exports of LNG bought by Japanese customers. While this may have increased Japanese energy security, LNG suppliers have benefited from the absence of price arbitrage between Japan and neighbouring markets. This contractual framework eliminates the buyers’ scope to trade LNG with other countries. The concern is that such territorial restrictions could now be resulting in a reduction in trading volumes, liquidity and increasing buy-side risk.

View full memo, Territorial Restrictions in Gas Supply Contracts in Japan – Antitrust Implications and Experience from the European Union.

Authors and Contributors

James Webber

Partner

Antitrust

+44 20 7655 5691

+44 20 7655 5691

London

Anthony Patten

Partner

Project Development & Finance

+65 6230 3892

+65 6230 3892

Singapore

Industries

Regional Experience