LNG

The Japanese Government’s key Minister of the Economy, Trade and Industry (METI), Yasutoshi Nishimura, said he had approved a proposal to help improve the nation’s emergency access to liquefied natural gas for power generation.

Minister Nishimura said in a statement that he would allow the government agency, the Japan Oil, Gas and Metals National Corporation (JOGMEC), to fund the purchase of spot LNG if required.

“Japan also plans to revise another law to allow the government to order large users to limit use of city gas in case of an emergency,” added the Nishimura statement.

Japanese LNG buyers who are the biggest utilities have been mindful of avoiding high-cost LNG purchases, though during August 2022 monthly LNG costs rose to over the US$6 billion ( 874.47 billion yen) level for the first time.

Rising energy costs are affecting the balance of payments of countries worldwide, though Japan is particuarly affected as it has no sizeable reserves of domestic energy resources and must buy in most of its oil, gas and coal.

However, the move on LNG supplies signals that there are limits to cutting off energy shipments as the Northern Hemisphere winter approaches.

Deliveries of LNG to Japan’s network of 37 terminals have amounted over the past few months to around 6.25 million tonnes, or amount 93 cargoes, according to trade figures from the Japanese Ministry of Finance.

Cargo competition

Even in the past week deliveries of LNG will slip as it lags North Asian LNG users China and South Korea in cargo numbers.

Shipping data shows that Chinese terminals are set to receive about 23 shipments in the week through October 16 compared with 18 bound for delivery to Korea and 14 shipments going to Japan.

Among JOGMEC’s traditional role is to help Japanese companies make equity investment in overseas energy projects as part of Japan’s focus on securing long-term oil and gas and other fuels and to make investments itself in important projects.

JOGMEC has also revised its statutes to investment in new and cleaner fuel ventures rather than just hydrocarbons and to raise its profile in sectors such as carbon-capture and storage.

Just last week, on October 8, JOGMEC agreed to collaborate with the Saudi Arabian Oil Company on upstream fuel ventures.

Hosono Tetsuhiro, Chairman and Chief Executive of JOGMEC, and Mohammed Al-Qahtani, Senior Vice President of Downstream at Saudi Aramco, signed the accord.

“JOGMEC intends to proactively support the implementation and/or provision of risk money, equity capital and liability guarantees, for a specific project in the Kingdom of Saudi Arabia related to the production and/or storage of hydrogen and ammonia, which are our new support areas under the revised JOGMEC law promulgated on May 20,” the agency explained.

Japanese liquefied natural gas imports fell 2.6 percent last month and thermal coal shipments jumped by over 27 percent as the International Energy Agency issued a timely report saying global coal-power’s sharp rebound is taking it to a new record in 2021, threatening net-zero carbon-dioxide reduction goals.

BP of the UK and one of India’s largest conglomerates, Reliance Industries, are on track for first gas from mid-2020 from projects developed to open up new Indian production when the nation is also increasing its LNG imports.

The RIL-BP joint venture has committed an additional $5 billion of investments towards monetizing about 3 trillion cubic feet equivalent of natural gas, or 500 million barrels of oil equivalent, from reserves in three projects.

The projects are named, R cluster, Satellite cluster and the MJ fields.

“These projects will utilize the existing gas production infrastructure. Further, this infrastructure can act as a hub for development of any discovery from contiguous areas,” said the BP-RIL partnership.

BP and Reliance sanctioned the projects in natural gas fields in the Krishna Godavari Dhirubhai offshore the East Coast of India.

India's Krishna-Godavari Basin covers more than 19,000 square miles offshore the state of Andhra Pradesh in the Bay of Bengal.

The KG-D6 block was Reliance’s first offshore gas field development and its first underwater discovery. It was also India's largest deposit of natural gas when first found in 2002.

“The first-gas from these fields is expected in mid-2020,” they stated.

“The peak production from these three fields is expected to reach 1 BCFe per day which is about 15 percent of envisaged Indian demand,” they explained.

The RIL-BP joint venture also confirmed that it had completed the safe cessation of production in a planned manner, from the D1 D3 field in Block KG D6, also off the East Coast.

India consumes more than 5 billion cubic feet a day of natural gas and aspires to double gas consumption after 2022.

The offshore gas supplies will be in addition to LNG imports which in December 2019 surged for a ninth month in the current fiscal year as more volumes were imported at a lower cost from countries such as Qatar, the US, Australia and West African nations.

LNG imports for December jumped by 22.7 percent to 2.08 million tonnes compared with the 1.70MT received in December 2018.

The main operating terminals on India’s West Coast are at Dahej, Hazira and Dabhol, near Mumbai. The newest terminal at Mundra is also now operational.

There is also the Kochi facility in the southwest state of Kerala and one East Coast terminal at Kamarajar, 25 kilometres north of Chennai Port in Tamil Nadu. 

India imports about 250 cargoes a year, mainly from Qatar, the US, Russia Australia and Africa.

The import figures also showed that December LNG imports cost India around $800M during the month, less than the $900M spent in December 2018.

The cost of the fuel from April to December 2019 was about $7.1Bln versus $8.0 Bln in the year-ago period.

India's current monthly LNG requirements for the regasification network is around 30 shipments.

The BP-RIL ventures will come on stream as the nation's domestic production of natural gas has been falling. For the month of December 2019, the output was 2.64 billion cubic metres compared with 2.86 Bcm in December 2018, down 7.9 percent.

Indian liquefied natural gas imports increased for a fourth month of the current fiscal year as volumes received rose more than 9 percent with supplies coming from countries such as Angola in southwest Africa and traditional suppliers such as Qatar.

LNG imports during July came to 2.02 million tonnes (2.73 billion cubic metres) which was 9.1 percent higher than 1.85MT delivered in the same month of 2018.

The main operating terminals on India’s West Coast are at Dahej, Hazira and Dabhol, near Mumbai, and there is one East Coast terminal at Kamarajar, 25 kilometres north of Chennai Port in Tamil Nadu.

The cumulative LNG imports for the first four months of the fiscal year from April to July came to 7.88MT (10.65 Bcm), an increase of 6.6 percent compared with the 7.39MT received in the first four months if last year, according to the Ministry of Petroleum and Natural Gas.

The July imports cost around $800 million versus $900M in July 2018. In the first four months of the fiscal year, the shipments have cost $3.1 billion compared with $3.4Bln in the same period last year.

Indian natural gas production during July edged 0.2 percent higher to 2.71 Bcm versus 2.04 Bcm in the same month of 2018.

Production of natural gas from April to July came to 10.74 Bcm, down 0.3 percent from the 10.78 logged in the April-July period last year.

Of the 30 or so cargoes delivered in July, Angola was a main supplier. The 160,400 cubic metres capacity carrier “Cubal” unloaded a cargo on July 1 at the Hazira terminal from the Angola plant at Soyo in southwest Africa.

The 160,500 cubic metres capacity vessel “Sonangol Benguela” delivered a shipment on July 16 to the Dahej terminal north of Mumbai from the Angolan plant.

The 160,400 cubic metres capacity vessel “Malanje” unloaded another Angolan cargo on July 24 at the Dahej terminal.

Analysts noted that India could easily import and use double its current capacity were it not for its lack of infrastructure.

On the terminal development front, Japanese company Toyo Engineering has been awarded a contract to construct another import terminal near Kodinar, north of Mumbai. This will be the seventh regasification facility on the West Coast when completed.

The facility will be located at Chhara port in Kodinar, part of the Gir Somnath district, and will have 5 million tonnes per annum of capacity.

The Indian Hiranandani Group recently said its floating LNG import facility at the West Coast port of Jaigarh would come on line before the end of 2019, a year behind schedule.

Its H-Energy subsidiary said the terminal would have annual capacity of 4 MTPA and would be capable of reloading LNG into other vessels.

The Jaigarh facility in the state of Maharashtra would be the fifth LNG import terminal near Mumbai.

The major natural gas consuming sectors for the combined LNG and domestic gas output in the last fiscal year were the fertilizer industry (29 percent), gas-fired power (21 percent), city-gas distribution (17 percent), refineries (13 percent) and petrochemicals (7 percent).