LNG

Japanese liquefied natural gas imports declined last month by 0.4 percent after three successive increases and year-on-year costs more than doubled as volumes increased from Asia and Australia.

Shipments of LNG to Japan’s network of 37 terminals amounted to 6.16 million tonnes in July 2022, or 92 cargoes, compared with 6.19MT, or 91 cargoes, in July 2021, according to the preliminary trade figures from the Japanese Ministry of Finance.

Japan had imported 5.80MT in June 2022 compared with 5.70MT in the same month of 2021.

The nation’s LNG costs in July 2022 amounted to 773.1 billion yen ($5.65Bln), a more that 124 percent increase compared with the 344.99 Bln yen ($2.52Bln) paid in June 2021.

Weaker yen

The effect on Japan’s balance of payments was severe in June as the Japanese yen dropped to a 24-year low against the dollar, though it recovered in late July and August, though dollar-based commodities like energy are still more expensive when converted back into yen.

Japan’s 2021 LNG cargo deliveries had been less than those of China for the first time and came to 74.31MT, down 0.2 percent on 2020 and 4.62MT less that the Chinese total for 2021.

Japanese thermal coal shipments also fell in July to 9.36MT, down by 4.1 percent from July 2021.

The price of thermal coal deliveries jumped higher to 408.46Bln yen ($2.98Bln), up 262.4 percent from July 2021.

During July the volumes of delivered LNG increased from Asia and Australia compared with last year.

Shipments of LNG to Japan in July increased by 19.6 percent to 1.73MT from Asian countries like Malaysia and Indonesia.

Middle East cargo deliveries from nations like Qatar were down by 54.7 percent last month to 401,000 tonnes.

Deliveries from the US increased by 8.9 percent from July 2021 to 665,000 tonnes.

This was higher than the 562,000 imported in July from the Russian LNG plant on Sakhalin Island, which were down 26.1 percent from July 2021.

The balance of LNG imports in July 2022 came from Australia, African nations and the spot market.

That segment of the imports was higher at 2.80MT compared with the 2.48MT logged in July 2021.

Nuclear

As of the start of July 2022, 10 nuclear reactors at six power stations have been given the go-ahead to restart in Japan but only four reactors were in operation.

Several Japanese Prefectures have agreed to restart the reactors, though were awaiting the implementation of safety measures and the completion of other construction work.

Before the Fukushima disaster in 2011, 54 nuclear reactors were in operation in Japan, supplying about 30 percent of the country’s electric power.

The 10 reactors with start-up approvals are at the following six power stations: Ōi, Takahama, and Mihama (Kansai Electric), Genkai and Sendai (Kyushu Electric) and Ikata (Shikoku Electric).

These plants based in western Japan all use pressurized water reactors, which are different from the boiling water reactors at the Fukushima plant than exploded after an earthquake and tsunami.

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.

The Japan Nuclear Regulation Authority (NRA) has taken a firm line on enforcing stricter anti-terrorism measures at nuclear plants meaning that four of the current nine operational facilities face shutdowns in 2020 and more LNG or thermal coal imports will be required.

French energy major Total has signed an agreement with Toshiba Corp. to take over the troubled Japanese group’s interests in the Freeport liquefied natural gas export project at Quintana Island in Texas for a sum of $800 million.

Total has signed an agreement with Toshiba to take over its 20-year tolling agreement for 2.2 million tonnes per annum of LNG from Freeport LNG’s Train 3 and the corresponding gas transportation agreements on the pipelines feeding the plant.

The Freeport facility’s Train 3 is expected to come on stream by the second quarter of 2020.

Under the transaction, Total will acquire all the shares of Toshiba America LNG for a consideration of $15M to be paid by Total to Toshiba and will be assigned all contracts related to their LNG business for a consideration of $815M to be paid by Toshiba to Total.

The agreement means that Total will receive from Toshiba a net cash consideration of $800M payable at the closing date of the transaction, expected by the end of 2019.

Toshiba’s energy business began to decline in 2017 when it decided to withdraw from the nuclear business outside Japan after huge losses forced its Westinghouse Electric unit to file for bankruptcy.

The Japanese group entered the LNG market in 2013 by signing its agreement with Freeport. Its tolling and pipeline deals meant financial commitments in the future it wanted to avoid as it restructured, hence its willingness to pay a third party to take over its agreements.

Toshiba had previously discussed a deal with ENN Group for China, an expanding player in the LNG business, before opting for Total.

“The takeover of Toshiba’s LNG portfolio is in line with Total’s strategy to become a major LNG portfolio player,” said Philippe Sauquet, President of Gas, Renewables and Power at Total.

“Adding 2.2 MTPA of LNG to our existing positions in the US, in particular Cameron LNG, will enable optimizations of the supply and operations of these LNG sources,” added Sauquet.

“Already an integrated player in the US gas market, Total is set to become one of the leading US LNG exporters by 2020 with a 7 MTPA portfolio,” he stated.

The Freeport transaction gives the French group a portfolio of around 40 MTPA of LNG through its stakes in leading export ventures in about a dozen countries, including Australia, Nigeria, Russia and Qatar.

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.

Japanese liquefied natural gas imports in November fell by 1 percent, though imports of coal as an alternative for power generation increased by over 5 percent as the monthly costs for Japan of LNG cargoes jumped year-on-year by almost $1 billion, or 38 percent.

Japanese liquefied natural gas imports in October increased by 6.5 percent as shipments from the Middle East and Australia offset a drop in Asian cargoes as the nation’s monthly LNG costs also jumped more than 49 percent year-on-year on higher prices and volumes.

Japanese liquefied natural gas import prices rose by 16.7 percent compared with the year-ago period and more shipments from the Middle East offset lower Asian cargo volumes while US LNG cargo volumes are catching up with those from Russia.

Japanese liquefied natural gas imports dropped 14.7 percent last month as shipments from Asia, the Middle East and the spot market fell and thermal coal purchases were preferred to LNG for power generation as the nation reined in its energy spending.

Japanese spot cargoes contracted in April to arrive in Japan at a later date cost an average of $9.10 per MMBtu compared with $5.70 per MMBtu in April 2017, a rise of 59 percent and along with oil-linked, long-term contract deliveries will be adding to the nation’s energy import costs as oil prices rebound.