LNG

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.

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.