Adgas in Tough Talks with JERA for Contract Extension

Abu Dhabi’s Adgas is engaged in tough talks with Japan’s JERA to extend its contract for Das Island supply. The talks have been going on for some time but have made little headway due to between JERA and Adgas differences regarding pricing.

JERA, through Tokyo Electric Co., has an existing contract with Adgas for 4.3 MMt/y on an ex-ship basis and it expires in March 2019. Tepco was Adgas’ foundation buyer and the first contract, for 17 years, began in May 1977. The subsequent contract for 25 years began in 1994 and will expire in March 2019. It is also the only long-term contract Adgas has remaining for supply from its 5.8-MMt/y three-train liquefaction project on Das Island. Like its contract extension with Petronas-operated MLNG Satu venture, JERA wants to reduce volumes and renew on a mid-term in order to extend the contract. JERA is understood to want to renew 0.5-1MMt/y of supply for three years for Das Island volumes, with a buyer’s option to extend for another two years.

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