Osaka Gas, a leading Japanese LNG importer, reported a 43 percent increase in consolidated net sales for the fiscal year to the end of March 2023, mainly due to higher prices for city-gas in Japan, though profits fell year-on-year because of the shut-down of Freeport LNG in Texas for most of the year from June and the higher cost of replacement cargoes.
Osaka Gas, which is part of the Daigas Group, increased annual sales to 2.27 trillion yen ($16.8 billion), up from 1.59 trillion yen ($11.8Bln) in the previous fiscal year.
The utility’s gross annual profits dropped to 282.2 billion yen ($2.09Bln) from 314.2Bln yen ($2.33Bln) in the 2021-2022 fiscal year.
Ordinary profits declined by 33.5 percent on the year to $74.65Bln yen ($560.8M) versus 113.52Bln yen ($841.5M) in the previous fiscal year.
“This was primarily due to the higher unit selling price of city gas under the fuel cost-adjustment system and an increase in sales from a rise in LNG prices and in the Domestic Energy Business and an increase in sales from the upstream project in the USA and Australia in the International Energy Business,” said Osaka Gas.
Negative impact
“In the Domestic Energy Business, although the negative impact of the time lag between fluctuations in raw material costs and their reflection in the unit selling prices diminished compared with the previous fiscal year, costs for LNG procurement increased,” the company explained.
Osaka Gas added that its number of consolidated subsidiaries was currently 154, with nine subsidiaries added and five removed since the fiscal year ended.
In its explanation of reduced profits from Freeport LNG, Osaka Gas noted that a fire broke out at the liquefaction plant of the Freeport LNG project, one of the Daigas Group’s investments and LNG sources.
“In response to the shutdown, we prepared to secure replacement LNG for the volumes the Group originally planned to procure from the project during the shutdown period and arranged modification regarding the contracts related to LNG procurement from the Freeport Project. The Project restarted operations at the plant in February of this year,” said Osaka Gas.
Global volumes
Osaka gas also has booked volumes from other global projects such as Oman LNG in the Arabian Peninsula, Gorgon LNG in Western Australia, the nearby Northwest Shelf Project and the Bintulu LNG plant in Malaysia.
Other Osaka Gas suppliers include Papua New Guinea LNG and the Sakhalin export plant in the Russian Far East.
In its future earnings forecast to March 2024, the utility said that consolidated ordinary profit was expected to increase by 83.3Bln yen ($607M) year-on-year to 159.0Bln yen ($1.78Bln) with Freeport back on stream.
“This is primarily due to an increase in profit in reaction to the absence of costs and losses associated with the Freeport fire in this fiscal year,” said Osaka Gas.
