LNG

Japanese shipping company Mitsui OSK Lines (MOL), whose energy fleet includes over 150 tankers for oil and other products and around 90 LNG carriers, reported stable LNG profits while the containership business was badly hit by a “tidal wave” of new vessels in the sector.

Japanese liquefied natural gas imports decreased for a second month in 2024 by almost 6 percent as milder winter weather and higher storage levels reduced cargo needs especially of more expensive spot shipments even at much lower prices.

Japanese liquefied natural gas imports dropped by 10.5 percent amid milder winter weather and prices at almost 30 percent lower levels while thermal coal imports were steady and plans were revealed for another nuclear restart.

Japanese liquefied natural gas imports dropped again last month as storage increased and North Asian prices declined with thermal coal deliveries also plunging while nuclear plant usage is increasing.

Japanese liquefied natural gas imports plunged by more than 20 percent in June from the same month last year while half-year imports fell 13 percent with more competition coming from thermal coal and nuclear and more gas storage being built earlier in 2023 as prices declined.

Russian natural gas company Gazprom has signed up the Central Asian republic of Uzbekistan as its newest customer after the cut-off in 2022 of European pipeline gas deliveries by the Nord Stream route to Germany after the Ukraine invasion.

Japan's Economy, Trade and Industry Minister (METI) Nishimura Yasutoshi said during a tour of the Middle East that Japanese trading houses would soon sign an LNG supply agreement with the Sultanate of Oman on the Arabian Peninsula.

Japanese monthly LNG imports dropped by 5.4 percent year-on-year as costs increased by more than 50 percent and with the number of shipments from Asian nations and Australia rising as deliveries from other regions fell.

The November 2022 LNG shipments to Japan’s network of 37 terminals amounted to 5.55MT, or 82 cargoes, compared with 5.86MT, or 87 shipments, in November 2021, according to preliminary trade data from the Finance Ministry.

The deliveries last month were, however, higher than those in the previous month of October 2022 when they were 5.08MT.

Those October shipments had been higher by 9.9 percent than the October 2021 deliveries received.

The costs of the November LNG cargoes increased by 52 percent year-on-year to 750.52 billion yen ($5.48Bln) compared with the November 2021 costs of 494.77Bln yen ($3.61Bln), the Ministry data showed.

For the past six months, Japan has seen a record trade deficit for each month, as rising energy and raw material costs have pressured the economy.

While LNG imports fell in November deliveries of thermal coal for power generation also plummeted by 18.5 percent to 8.58MT.

The top eight suppliers of LNG to Japan have most recently been Australia with more than one-third of deliveries, Malaysia, Qatar, Russia, the US, Brunei and Papua New Guinea.

Cargo sources

The November shipments from Russia’s Sakhalin Island plant in the Far East fell 14.4 percent to 446,000 tonnes while deliveries from the US dropped by 52.2 percent versus November 2021 to 191,000 tonnes.

Shipments of LNG from Asia in November increased by 5 percent to 1.62MT.

The Ministry data also showed that Middle East deliveries were the biggest fallers by 54.2 percent to 484,000 tonnes.

The balance of imports and the biggest portion in November 2021 came from Australia with minor additions from African nations and the spot market.

That segment of the imports was well up at 2.81MT compared with 2.34MT in November 2021, though was less than the October 2022 combined import figure of 3.03MT.

Japan has also lagged in increasing nuclear power into the energy mix in 2022.

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. 

Australia’s nine liquefied natural gas export plants shipped an estimated 6.66 million tonnes of LNG during the month of August compared with 6.20MT delivered in the previous month as Asian demand remained high, while prices dropped significantly month-on-month in the Australian domestic gas market.

Japanese liquefied natural gas imports increased for a fourth straight month while prices jumped almost 90 percent year-on-year, though imports of thermal coal surpassed LNG, surging 34.5 percent last month to meet higher power demands.

The August 2021 LNG shipments amounted to 6.29MT, or around 90 cargoes, which was 7.8 percent higher than the 5.8MT received in August 2020, according to the preliminary trade figures from Japan's Ministry of Finance.

The July deliveries had amounted to 6.18MT, up 2.5 percent from the 6.03MT received in July 2020.

Japan’s shipments in August cost 363.01 billion yen ($3.31Bln), a rise of 89.3 percent on the 191.76Bln ($1.75Bln) spent in August 2020, though for fewer cargoes.

LNG competes mainly with thermal coal for power generation in Japan and the shipments of coal increased by 34.5 percent year-on-year in August to 10.6MT.

Japan’s thermal coal imports in July 2021 were also high at 9.81MT, up 10.90 percent on the same month in 2020.

Nuclear power generation in Japan is still much reduced with only five plants with nine reactors from a total of 16 plants with 50-plus reactors having gained the agreement of local authorities to resume operations.

Just nine of these reactors are currently on line at six plants.

LNG cargo deliveries to Japan during August 2021 from nations such as Malaysia and Indonesia, Papua New Guinea and Brunei rose by 18.5 percent to 1.46MT compared with August 2020.

Middle East shipments from countries like Qatar and Oman were 25.2 percent up year-on-year at 1.25MT.

However, shipments from Russia last month fell 75.7 percent to 144,000 tonnes because of maintenance work at the Sakhalin Island plant in the Russian Far East.

US cargo deliveries to Japan almost doubled year-on-year to 541,000 tonnes, though were less than the previous month's total of 611,000 tonnes.

The balance of imports in August 2021 came from Australia, African nations and the spot market.

That segment of the imports was higher than the previous month at 2.89MT versus last month’s 2.48MT and the deliveries were also above the 2.74MT received in August 2020.

Annual LNG deliveries to the Japanese import network of 37 facilities came to 74.46MT in 2020, down 3.7 percent compared with the 77.32MT received in 2019.

Imports by the world’s largest buyer of LNG have continued to drop in recent years and in 2021 the Japanese total will be overtaken by China.

Japan's 2019 import total of 77.32MT was 6.7 percent lower than the 82.85MT logged in 2018.