Osaka Gas posts losses blamed on Freeport fire even as sales income rose from higher city-gas prices
Osaka Gas, the Japanese utility and liquefied natural gas buyer, reported increased net sales for the first nine months of the fiscal year, though posted losses blamed on the June 2022 fire at the US Freeport LNG export plant.
The company, which is part of the Daigas Group, said nine-month 2022 sales to the end of December increased to 1.59 trillion yen ($12.16Bln), a rise of 536.4Bln yen ($4.8Bln) over the same period of the previous fiscal year.
“This was primarily due to an increase in sales from a rise in the LNG selling prices and the higher unit selling price of city gas under the fuel-cost adjustment system 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.
However, Osaka Gas whose President is Masataka Fujiwara, said ordinary profits decreased by 78.5Bln ($597 million) to a year-on-year nine-month loss of 6.8 billion yen ($51.8M).
Profit attributable to owners of parent company fell by 56.5Bln yen ($430M) to a net loss of 1.3Bln yen ($9.9M).
“A fire broke out at the liquefaction plant of the Freeport LNG project, one of the Daigas Group’s investments and LNG sources and the project’s operations at the plant have been suspended since,” said Osaka Gas in its earnings report.
Replacement cargoes
“In response to the shutdown, we have been preparing to secure replacement LNG for the volumes the Group originally planned to procure from the project during the shutdown period and has been arranging modification regarding the contracts related to its LNG procurement from the project,” added Osaka Gas.
The utility said that considering recent trends in its performance and other factors, the company has increased its full-year sales forecast to the end of March 2023 but will forecast a loss on the problems at Freeport.
“Net sales are expected to exceed the previous forecasts mainly due to the rise in the unit selling price of city gas under the fuel cost adjustment system,” it added.
It additionally expects operating profits and ordinary profits to remain unchanged from the previous forecasts.
“This means they will feel the negative impact, including increases in costs and losses associated with the fire at the liquefaction plant of Freeport LNG, but offset by positive impacts, including an increase in profits from city gas caused by the improvement of our long-term LNG contract competitiveness,” explained Osaka Gas.
Osaka Gas said the revised full-year earnings forecast to March 2023 includes the estimated negative impact of around 149.5 billion yen ($1.14Bln) due to costs, losses and a revenue decrease associated with the Freeport fire.
