LNG

The Japanese Government’s key Minister of the Economy, Trade and Industry (METI), Yasutoshi Nishimura, said he had approved a proposal to help improve the nation’s emergency access to liquefied natural gas for power generation.

Minister Nishimura said in a statement that he would allow the government agency, the Japan Oil, Gas and Metals National Corporation (JOGMEC), to fund the purchase of spot LNG if required.

“Japan also plans to revise another law to allow the government to order large users to limit use of city gas in case of an emergency,” added the Nishimura statement.

Japanese LNG buyers who are the biggest utilities have been mindful of avoiding high-cost LNG purchases, though during August 2022 monthly LNG costs rose to over the US$6 billion ( 874.47 billion yen) level for the first time.

Rising energy costs are affecting the balance of payments of countries worldwide, though Japan is particuarly affected as it has no sizeable reserves of domestic energy resources and must buy in most of its oil, gas and coal.

However, the move on LNG supplies signals that there are limits to cutting off energy shipments as the Northern Hemisphere winter approaches.

Deliveries of LNG to Japan’s network of 37 terminals have amounted over the past few months to around 6.25 million tonnes, or amount 93 cargoes, according to trade figures from the Japanese Ministry of Finance.

Cargo competition

Even in the past week deliveries of LNG will slip as it lags North Asian LNG users China and South Korea in cargo numbers.

Shipping data shows that Chinese terminals are set to receive about 23 shipments in the week through October 16 compared with 18 bound for delivery to Korea and 14 shipments going to Japan.

Among JOGMEC’s traditional role is to help Japanese companies make equity investment in overseas energy projects as part of Japan’s focus on securing long-term oil and gas and other fuels and to make investments itself in important projects.

JOGMEC has also revised its statutes to investment in new and cleaner fuel ventures rather than just hydrocarbons and to raise its profile in sectors such as carbon-capture and storage.

Just last week, on October 8, JOGMEC agreed to collaborate with the Saudi Arabian Oil Company on upstream fuel ventures.

Hosono Tetsuhiro, Chairman and Chief Executive of JOGMEC, and Mohammed Al-Qahtani, Senior Vice President of Downstream at Saudi Aramco, signed the accord.

“JOGMEC intends to proactively support the implementation and/or provision of risk money, equity capital and liability guarantees, for a specific project in the Kingdom of Saudi Arabia related to the production and/or storage of hydrogen and ammonia, which are our new support areas under the revised JOGMEC law promulgated on May 20,” the agency explained.

Japanese spot liquefied natural gas cargoes delivered in September cost $5.20 per million British thermal units less than in the same month a year ago, though just $0.60 less than in August 2019 amid an over-supplied market and tentative demand.

Japanese spot liquefied natural gas cargoes delivered in August cost $4.30 per million British thermal units less than in the same month a year ago, though $0.80 more than in July 2019 amid an over-supplied market.

Japanese spot liquefied natural gas cargoes were contracted for Japan last month at a cost of $3.90 per million British thermal units less than in April 2018 and down $1.20 per MMBtu versus March 2019.

Japanese spot LNG delivered cargo prices were at an average of $10.60 per million British thermal units in December, a rise of $2.50 per MMBtu compared with the price the previous year of $8.10 per MMBtu, though lower than the November 2018 price.

Japanese government figures show that the average contracted price of spot liquefied natural gas cargoes for Japan in September soared by $1.20 per million British thermal units compared with a year ago to $6.90 per MMBtu.