LNG

Japan has formally retaken from China its position as the World No. 1 LNG importer with more volumes coming from Australia, Russia and its Asian neighbours even as overall deliveries to Japanese terminals fell in 2022 and slumped in December.

Japanese liquefied natural gas imports plummeted by more than 22 percent as the nation opted for more than twice the amount of coal than LNG for thermal power generation and only imports from Australia and the US held up as cargo numbers from Asia, the Middle East and Russia dropped.

JERA Co Inc., the largest Japanese liquefied natural gas buyer and power assets owner, said it was overhauling its business while increasing its medium-term LNG activities with a larger carrier fleet as it aimed for 3.6 trillion yen ($33 billion) of sales in fiscal 2019.

The company said it now had volumes of LNG amounting to 35 million tonnes per annum, upstream investments in five projects and was increasing its LNG fleet from 18 vessels to 25 to ship its cargoes.

However, while LNG activities would focus on growth through 2030, after that date Japan’s needs for power generation could be different.

For its power generation arm of Tokyo Electric Power and Chubu Electric, JERA controls domestic power capacity of 67 gigawatts and a total of nine gigawatts of overseas output.

JERA said the direction was uncertain for Japan’s future power mix, though by 2030 it could have 20-22 percent nuclear power units in operation, 24-22 percent made up of renewable energy projects, 27 percent gas-fired plants supplied with regasified LNG, 26 percent coal-fired plants and 3 percent oil-fired plants.

Under the transition, Japan could replace more plants requiring LNG with renewable projects than other generating facilities, leading to a possible future decrease in LNG imports of around 14 percent after 2030.

The 2030 energy mix numbers differ significantly from the 2016 figures of 16 percent nuclear, 41 percent gas-fired plants using LNG, 33 percent coal and 10 percent oil.

“Population shrinkage and sluggish demand means that a constant growth of domestic demand for electricity can’t be expected in the future,” according to JERA.

Its figures suggest the Japanese population could drop to 93 million people by 2060 from 128 million at present.

JERA explained that its company structure would now comprise three separate departments overseeing the five main sectors of its business, fuel markets, fuel procurement, power plants, electricity sales and the domestic electricity market.

JERA said the role of its “Optimization Department” would assume greater importance in the future.

“It will be responsible for increasing profits through operational excellence in power plants and fuel terminals, as well as market trading of fuel, electricity and gas, based on the existing agreements,” said the company.

The company’s “Business Development Department” would also have a key role.

“It would increase returns by achieving the optimal asset portfolio through new installations and the replacement and restructuring of power plants,” added the company.

JERA’s “Operations & Maintenance Department” would be responsible for boosting returns by achieving high value-added services through “agile operations and cost reductions” in utilizing its infrastructure.

The company said it would use LNG and renewables to spark the transition to a clean-energy economy up to 2025.

“Through enhancing the LNG value chain and undertaking large-scale renewable energy development and constructing a complementary relationship between LNG-fired power and renewables, JERA will provide stable, economic and clean energy,” stated the company.

JERA said it would also implement “six measures” to achieve its strategy goals and to be a world leader in LNG and renewables.

“For LNG, we would maintain and expand our fuel procurement scale through replacement of domestic power plants with more efficient facilities and with expansion of generation,” it explained.

“We would leverage that scale for LNG trading expansion and upstream project participation and improve profitability along the entire value chain,” JERA added.

“For renewable energy, we would leverage our large-scale project development competence that we gained from the existing projects, promote development focusing on offshore wind power in particular, and grow it as one of the main pillars of the business in our future portfolio,” stated the company.

Japan has been returning to nuclear power and now has nine units operating with a total electricity generation capacity of 8.7 gigawatts and a US report has forecast that imported LNG supplies for Japanese gas-fired power plants would likely decline in 2019.

While LNG imports to Japan rose last month to 6.53 million tonnes, the thermal coal purchases by the world’s largest LNG importer were even higher at 9.19 million tonnes, raising concerns among Japanese officials that coal will lead to embarrassment on the Kyoto Protocol on greenhouse-gas emissions.