LNG

Mitsubishi affiliate Diamond Gas has shipped the first LNG cargo from the massive LNG Canada terminal as of June 30th, local time. Japan is the “primary destination” for Mitsubishi’s offtake quota of 15%, or about 2.1 mtpa of the total LNG produced at the 14 mtpa liquefaction terminal in Kitimat, B.C.

Mitsubishi Corp., the Japanese trading house with widespread LNG assets from Canada, to the US Gulf Coast to the Asia-Pacific and Russia, said it was retaining its stake for now in the Sakhalin LNG export project in the Russian Far East.

This Mitsubishi Natural Gas division’s assets and volumes are concentrated in the Asia-Pacific region, Russia, the US, Canada and Oman.

“We are working on initiatives to strengthen our existing business platform and develop new projects in traditional LNG-producing countries such as Brunei, Malaysia, Indonesia, Australia and Oman,” said the company.

Mitsubishi’s project stakes in addition to Sakhalin LNG in Russia include Sempra’s Cameron LNG in Louisiana, Shell’s LNG Canada project, Brunei LNG, Malaysia LNG, Oman LNG, Tangguh LNG in Indonesia and the Donggi Senora LNG plant, also in Indonesia.

It also has volumes from the Chevron-operated Wheatstone LNG project in Western Australia and the North West Shelf plant operated by Woodside Energy.

“Earnings were increased in the LNG-related business, despite trading losses in the LNG sales business,” said Mitsubishi in its fiscal first-half earnings statement.

Price benefits

Like global energy companies, Japanese trading houses have benefited from skyrocketing oil, gas and coal prices in 2022.

For the April-September first half, Mitsubishi’s net profit nearly doubled to a record 720 billion yen ($4.90Bln), a rise of 97 percent from the 360.56Bln yen ($2.45Bln) logged in the fiscal first half of 2021.

Revenues for the six months came to 10.72 trillion yen ($73.05Bln) compared with 7.72 trillion yen ($57.63Bln) in the first half of 2021.

“This was mainly due to increased market prices and transaction volumes,” said Mitsubishi.

“In addition to Natural Gas and Mineral Resources, which were bolstered by market factors, Automotive & Mobility, Power Solution, Industrial Materials and other segments are forecast to see greater earnings than originally forecast,” said the company.

Mitsubishi is an investor and trader in LNG along with the other Japanese trading houses such as Mitsui & Co, Marubeni Corp and Sumitomo Corp.

Sakhalin situation

On Russia, Mitsubishi said the company’s main business in Russia consists of a financial service business in the Automotive and Mobility segment and investment in the LNG-related business as part of its Natural Gas division.

“As of September 30, 2022, the carrying amount of total assets related to the company’s business in Russia was 209.91Bln yen ($1.43Bln),” said Mitsubishi.

“The company holds a 10 percent ownership interest in Sakhalin Energy Investment Company (SEIC), which has been engaged in LNG-related business in Russia, and accounts for this investment as a financial asset,” explained Mitsubishi.

It said that based on the Russian Federation presidential decree issued on June 30, 2022 and a further resolution, a new company, Sakhalin Energy LLC (SELLC), was established to take over the operation of this LNG business, and the rights and obligations of SEIC were transferred to SELLC.

“Mitsubishi submitted its notice to continue ownership in the LNG-related business to the Russian government and received approval on August 31, 2022. As a result, the company continues to hold a 10 percent ownership interest in the LNG-related business,” it added.

“However, the details related to the operation of SELLC, including the terms of the LLC members agreement, will need to be discussed once the LLC members composition of SELLC will be determined,” said Mitsubishi.

“As such, there remains uncertainty surrounding this investment,” it declared.