Last month, Japan’s Fair Trade Commission announced it was studying the possibility of eliminating destination clauses in the country’s LNG contracts. This would allow Japanese companies with LNG contracts to resell these volumes.

Before the elimination of these clauses, Tokyo Gas Co., the country’s second-largest buyer of LNG, is reviewing ways to cut costs on LNG by swapping cargoes with European companies, according to a Bloomberg report.

Under this proposal, Tokyo Gas would trade cargoes that it is set to begin receiving next year from Dominion’s Cove Point terminal in Lusby, Md., with cargoes the European companies are contracted for from Asian facilities.

Such a move would cut the shipping times for Tokyo Gas in half, as shipping times from Cove Point to Japan are 20 days and volumes being shipped from Asian countries take 10 days to ship.

Tokyo Gas’ Executive Officer Kentaro Kimoto said that a swapping arrangement would also help provide the company with flexibility to avoid being over- or undersupplied.

In addition to Tokyo Gas, Jera Co., a joint venture between Tokyo Electric Power Co. Holdings Inc. and Chubu Electric Power Co., plans to announce a second agreement to trade volumes with European companies.

According to multiple reports, Osaka Gas Co. is also considering a swap arrangement with E.ON SE that would see Osaka resell 2.5 million tons per year of LNG it is contracted to receive from the Freeport, Texas, LNG terminal beginning in 2018.

“A seismic shift is taking place in LNG markets. We expect a shift from a rigid trade practice to a flexible business form. We want to deal only with suppliers who are open to such discussions,” Kimoto told Bloomberg.

Frank Nieto can be reached at fnieto@hartenergy.com.