LNG

Japanese liquefied natural gas imports decreased for a third straight month and were also 8 percent lower for the whole fiscal year to the end of March as storage was still high amid falling spot prices.

Japan, which formally took back the World No. 1 LNG importer spot from China in 2022, reported a small rise in LNG shipments in January though at a much higher cost than in the prior-year period.

Imports for January amounted to 6.82 million tonnes, or about 100 cargoes, and an increase of 0.5 percent from the 6.78MT received in January 2022, according to Japan's Finance Ministry.

The imports cost 873.8 billion yen ($6.54Bln), which was 57 percent more than the 556.6Bln ($4.16Bln) cost of shipments in January 2022.

While China’s LNG imports dropped by 18.8 percent to 64.15MT, the official Japanese LNG import volumes for 2022 came to 71.99MT compared with 74.31MT in 2021, showing a fall of 3.1 percent but still enough to essily maintain the lead over China.

China had overtaken Japan in 2021 to become the world’s largest LNG importer with 78.93MT of imports, though then slipped back because of the economic slowdown and Covid-19 restrictions affecting energy demand.

Japan’s annual LNG costs jumped by 97.5 percent to 8.55 trillion yen ($64.34Bln) in 2022.

Monthly LNG imports for December 2022 to Japan’s network of 37 terminals had fallen by 13.8 percent to 6.06MT from 7.03MT in the same month of 2021.

Coal imports

Japan continued to use an increased proportion of thermal coal for electricity generation and the January coal imports rose by 1.3 percent from January 2022 to 10.68MT.

LNG cargo deliveries from Asian countries like Malaysia and Indonesia increased in January by 17.8 percent to 1.88MT.

Middle East cargo imports rose by 24.1 percent to 787,000 tonnes during the month.

LNG imports from the US tumbled by 73.9 percent year-on-year to 90,000 tonnes as cargoes from American export plants were pointed at Europe.

Imports from Russia declined on the month by 9.7 percent to 704,000 tonnes and cost 78.6Bln yen ($589M) for what amounted to 11 cargoes.

The cost to Japan of Russian deliveries for all of 2022 was 82.4 percent higher than in the previous year with the bill from the Russians coming to 677.5Bln yen ($5.24Bln).

Japan continues its deliveries of LNG from the Russian Far East plant at Sakhalin Island even after the invasion of Ukraine in February 2022 as energy security outweighed the Western-led imposition of sanctions against Russia on the energy and financial fronts.

The balance of Japan's LNG imports in January amounted to 3.86MT in the form of deliveries from the country’s largest supplier Australia, some spot cargoes and small volumes from Africa.

In its energy mix in 2022, Japan has continued to delay more nuclear power re-starts meaning that volumes of LNG and coal purchases remain high.

Since the Fukushima disaster, only 10 reactors have been given the go-ahead to go back into operation compared with the 54 that were online in 2011 and which supplied around 30 percent of Japan’s energy needs.

A further 21 reactors have been decommissioned since 2011 and will never be re-started.

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.

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.

Japan’s liquefied natural gas imports jumped by 7.3 percent last month, backed by a more than doubling of US supplies, underpinned by cargoes from Australia and the spot market, while thermal coal shipments surge by almost 11 percent.

Spot liquefied natural gas cargoes delivered to Japan last month cost $2.20 per million British thermal units more than in the previous month even as market prices were much lower and available volumes were high.