LNG

The Japan Bank for International Cooperation (JBIC) has signed a US$1 billion loan agreement to help finance the Scarborough Gas Project in Western Australia to provide feed-gas supplies for the Train II development at Pluto LNG operated by Woodside Energy.

March 28 (LNGJ) - Japan’s future LNG needs may be further affected by moves to bring the Kashiwazaki-Kariwa nuclear facility in central Japan, one of the largest in the world by output, back on line. Tokyo Electric Power Company (TEPCO) Holdings, the publicly listed company and plant operator majority-owned by the Government of Japan, said it had submitted a proposal to deliver nuclear fuel to the No. 7 reactor at its idled Kashiwazaki-Kariwa nuclear plant as early as April 15.

   JERA Co. Inc., Japan’s largest LNG importer, is 50-percent owned by TEPCO and another 50 percent stake in JERA is held by Chubu Electric Power. TEPCO said it was seeking approval for the fuel plan from the Nuclear Regulation Authority. However, it was still uncertain whether the 1.35-million-kilowatt reactor located in the coastal area of Niigata Prefecture can actually be restarted soon because such a move still requires the consent of all local governments in the service area.

JERA Co. Inc, Japan’s biggest liquefied natural gas importer and utility company, has agreed to acquire a large stake in the Scarborough gas field development offshore Western Australia from Woodside Energy for US$1.5 billion, giving a financial boost to the Pluto LNG expansion.

JERA Co. Inc, Japan’s biggest liquefied natural gas importer and utility company, has signed an accord with a unit of Indonesia’s state-owned power supplier PT PLN (Persero) to cooperate on LNG supplies for Indonesian domestic use.

JERA Co. Inc, Japan’s biggest liquefied natural gas importer and utility company, said it expected the LNG demand-supply imbalance to be less serious this winter season than last because the forecast milder weather, the high storage held in Europe and the delayed resurgence of the economy in China.

JERA, which buys around 35 million tonnes per annum of LNG and is Japan’s biggest fossil-fuel electricity generator being owned jointly by Tokyo Electric Power and Chubu Electric, the two largest power companies, gave the LNG market forecast in a company earnings presentation

The presentation in Tokyo was led by JERA President and Chief Executive Hisahide Okuda.

JERA, which currently oversees the operations and provides fuel for a total of 26 power plants in Japan and imports LNG into 11 of Japan’s network of 37 terminals, said the only issue to be concerned with was that of the unexpected.

Potential issues

“Since overall global supply has not grown, there is the potential for LNG production issues on the supply side - a problem at any LNG plant could cause prices to jump. We believe, therefore, that the environment for LNG procurement remains unpredictable,” Okuda explained.

“Turning to LNG fundamentals, although demand for LNG is growing, particularly in Europe, LNG supply is not expected to catch up to that demand until around 2025, leading to a tight supply-and-demand situation,” the CEO said.

“However, at JERA, in addition to building an LNG portfolio that combines long-term, short-term, and spot contracts, we also secure a stable fuel supply by flexibly optimizing procurement and resale through JERA Global Markets,” Okuda added.

He noted that the company was also following the “Strategic Buffer LNG (SBL)” plan proposed by the Ministry of Economy, Trade, and Industry (METI) whereby at least one LNG carrier-load of surplus LNG per month between December and February can be supplied to any domestic operators as determined by METI.

According to METI and its Policy Subcommittee on Electricity and Gas, Japan will have a winter’s reserve margin exceeding the 3 percent minimum necessary to ensure stable supply.

“JERA, however, is taking nothing for granted. We will be doing our utmost to secure both kilowatts and kilowatt hours in order to ensure stable power supply,” CEO Okuda stated.

Older plants

“JERA is moving steadily forward in replacing older thermal power plants with state-of-the-art facilities. Six units, totaling 4.32 million kilowatts, whose replacement has already been completed, have begun commercial operation,” he added.

The CEO declared that looking to 2024, JERA would continue moving forward with an additional 2.99 million kilowatts in power plant replacement.

“We believe that moving decisively in this way to upgrade power sources is an important part of ensuring safety,” Okuda said.

In addition, given the smooth progress of trial operations at Yokosuka Thermal Power coal-fired power plant’s Unit 2, we will be moving its start of commercial operation forward from February 2024 to December 2023, which will also contribute to this winter’s supply capacity,” the CEO said.

The Yokosuka coal-fired plant is described by JERA as a “high-efficiency coal-fired power station that uses an ultra-supercritical (USC) power generation” system.

“Its generating capacity of 650 megawatts will contribute to a stable electricity supply,” Okuda added.

The JERA CEO said that the company was also moving forward with carbon-capture and storage projects in Asia.

JERA is carrying out joint research with Japanese LNG and energy engineers JGC Holdings Corp. and the Indonesian state electricity company Perusahaan Listrik Negara (PLN) on a project to introduce and commercialise CCS for thermal power.

“With these projects and others, we are collaborating on decarbonisation with a growing number of Asian countries including Bangladesh, Thailand, Malaysia, the Philippines, Vietnam, Indonesia and Singapore,” Okuda said.

Japan’s biggest liquefied natural gas importer, JERA Co. Inc., has named James Tinsley as Chief Commercial Officer of the JERA Americas subsidiary based in Houston in Texas as the Japanese company also hinted at US expansion moves.

JERA Co. Inc., the largest Japanese importer of LNG, had to cope with an emergency on March 27 after sulfuric acid starting leaking from the pipes of a wastewater treatment facility at the Hirono Thermal Power Station in Fukushima Prefecture in the region where the nuclear disaster and tsunami occurred 12 years ago.

Japan Oil, Gas and Metals National Corp. (Jogmec), the agency helping secure a stable supply of oil and natural gas and other resources, has just published the results of two surveys on the volume of LNG handled by Japanese companies and the current status of destination restrictions in LNG sales and purchase agreements.

Jogmec was set up by the Tokyo Government in 2004 and has the full cooperation of all Japanese companies engaged in LNG.

The agency said that the latest surveys were aimed at “improving the flexibility and liquidity” of the LNG market to enhance energy security.

The survey on the “LNG Handling Volumes of Japanese Companies” revealed that they handled around 110 million tonnes of LNG in the fiscal year 2021.

The second survey on the “Destination Clauses and Price Indices in LNG SPAs” showed that the contract quantity with destination restrictions were improving for 10-year contracts through 2030.

“About 45 million tonnes, or 53 percent of the total, in the fiscal year 2021, had destination clauses compared with 21 million tonnes, or 43 percent of the total, in the fiscal years through to 2030,” said Jogmec.

LNG handled

“The LNG volumes handled by Japanese companies last year came to 109.57MT, showing a slight decrease of 0.73MT from the previous year. However, the Japanese companies have continuously achieved 100MT since fiscal 2019,” said the report.

Jogmec also noted that the FY2019 and FY2020 actual figures had been revised in this latest survey due to corrections of reports from the surveyed companies.

LNG imports in FY2021 totaled 71.46MT, a decrease of 4.9MT from the previous year, while the volume of the “external trade” increased by 4.17MT to 38.11MT, resulting in the LNG handling volume in FY2021 being at almost the same level as in FY2020.

The second survey looked at 10-year contracts from FY2021 through FY2030 and based on the annual contract quantity (ACQ).

The ACQ of the fixed-term SPAs concluded by Japanese companies was approximately 84MT in FY2021 and will amount to 49MT through FY2030.

As of FY2021, the ACQ for Delivered Ex-Ship (DES) and free-on-board (FOB) terms and their respective shares were approximately 50MT, or 59 percent, for DES terms and 34MT, or 41 percent, for FOB terms.

“As of FY2030, as the ACQ declines, the ACQ for DES and FOB terms is also to decrease to approximately 25MT and 24MT respectively,” said Jogmec.

Tokyo Gas, the Japanese LNG importer and city-gas operator, said 20,000 of its employees joined with other companies in downtown Tokyo to take part a successful day-long training drill assuming a large-scale future earthquake in the Tokyo metropolitan area.

“We carried out a comprehensive disaster prevention drill and such comprehensive drills have been conducted since 1983 with the aim of strengthening the disaster response capabilities of the Tokyo Gas Group,” said the company.

“In addition to about 20,000 employees of the Tokyo Gas Group, there was also cooperation with other Tokyo bodies, including the Metropolitan Police Department, the Metropolitan Expressway Company and Nippon Telegraph and Telephone (NTT) East Corp,” explained Tokyo Gas.

The statement said that close cooperation also ensued between Tokyo Gas and Tokyo Electric Power Grid Inc. and TEPCO Energy Partners and related organizations and other infrastructure companies.

The exercise was carried out imagining an earthquake with a maximum seismic intensity of 7 occurring in the southern part of the downtown area during daytime on a weekday in July and issues such as gas supply suspension had to be coped with.

Information flow

“We confirmed and verified the disaster response. During the training, we also carried out information linkage using the Tokyo Disaster Information System,” stated Tokyo Gas.

“This training focused on the ‘initial stage’ from the occurrence of the earthquake to about 24 hours after the earthquake, which enhances the resilience to disasters, and was conducted as a ‘blind type training’ without preparing scenarios in advance,” added the company.

The exercise included coping with various time scenarios and Tokyo Gas employees confirmed and verified how to be on alert for aftershocks and how to respond to continuous severe related incidents.

The company declared that the Tokyo Gas Group would continue to take measures against disasters such as earthquakes and work to realize a strong and safe energy supply for Japan.

Japan operates 37 separate LNG import terminals and Tokyo Gas imports around 13 million tonnes per annum of LNG.

An earthquake took place offshore eastern Japan on 11 March 2011 and became known as the Great East Japan Earthquake and Tsunami.

Around 20,000 people died in that disaster which also damaged the Fukushima nuclear plant and set in motion profound changes in the nation’s energy outlook.

It also led to Tokyo Electric Power Co. and Chubu Electric Power, the two largest users and importers of LNG in Japan, integrating their thermal power operations and LNG imports under joint venture company JERA Co. Inc.

JERA Co. Inc, Japan’s largest buyer of liquefied natural gas, has successfully bid in a public auction conducted by general electricity transmission and distribution companies to supply additional power to the nation for July and August, including from two reprieved gas-fired power stations built in the 1970s for regasified LNG.