LNG

Japan’s liquefied natural gas imports declined last month after near record shipments in the previous month and with a fall in spot and Asian cargo numbers being offset by rises in Middle East, US and Russian shipments.

LNG imports and gas-fired power will continue to be critical parts of the energy profile of Japan with LNG representing the third-largest energy source in total primary imports after oil and coal, according to a report just published by the Paris-based International Energy Agency.

Japanese liquefied natural gas imports edged higher by 0.3 percent in April after previously dropping for five straight months as LNG shipments from the Middle East plunged to a 14-year seasonal low and the nation’s energy demand slowed on the nuclear and thermal coal fronts.

Japan received 5.62 million tonnes of LNG in April compared with 5.60MT in the same month of 2018, according to preliminary figures from the Ministry of Finance.

Imports of thermal coal, a competitor to LNG, also declined by 2.5 percent to 8.5MT.

Nine of Japan's nuclear power plants, which numbered 54 on line before the Fukushima disaster in 2011, had re-started in April, though only seven are now operating.

LNG Cargoes delivered to Japan in March 2019 had amounted to 7.29MT compared with 7.93MT in March 2018, a fall of 8.1 percent.

The April 2019 rise in LNG deliveries to Japan was the first since October 2018 when 6.53MT was received, a 6.5 rise on the previous October.

Even during the peak winter months from November 2018 through January 2019, imports dropped as the Japanese followed fuel-saving measures and the government encouraged a drop in costly LNG imports.

The cost of the April 2019 cargoes came to 313.5 billion yen ($2.83Bln), a rise of 5.8 percent from the 296.2Bln yen ($2.68Bln) the cargoes cost in the same month a year ago.

For balance of payments purposes, Japan has been trying for a number of years to bring LNG import costs under control.

The Ministry’s data for April showed a plunge in imports from the Middle East region, to their lowest level since April 2005.

The April 2019 shipments from countries like Qatar, the United Arab Emirates and Oman totaled 945,000 tonnes versus 1.23MT in April 2018, a drop of 23.5 percent, suggesting plant maintenance work in the region at a time when there was also a reported outage of the Qatar-UAE Dolphin Energy natural gas pipeline.

The last time monthly shipments from the Middle East dropped under the 1MT level was in 2005 when they regularly totaled between 950,000 to 970,000 tonnes in the second quarter of the year.

Asian LNG shipments cargo deliveries increased by 12.4 percent to 1.47MT from nations such as Malaysia and Indonesia, Papua New Guinea and Brunei.

US deliveries amounted to 138,000 tonnes, the equivalent of two large cargoes while one delivery was received in the same month a year ago.

Monthly Russian shipments from the Sakhalin Island plant in the Far East amounted to 404,000 tonnes, a fall of 13.9 percent versus 2018.

The balance of imports from Australia, African nations and the spot market amounted to 2.66MT, a 32 percent rise compared with the 2.02MT received in April 2018.

Japanese LNG imports had declined by 0.9 percent in 2018. The 2018 imports amounted to 82.85MT versus 83.63MT received in 2017.

Japan’s 2018 import bill was 20.8 percent higher than in 2017 at 4,730Bln yen ($43.14Bln). The Japanese had paid 19.3 percent more in 2017 compared with the previous year with an LNG bill of 3,915Bln yen ($35.58Bln).

Japanese liquefied natural gas imports plunged 11.4 percent with only Middle East volumes holding up as more coal-fired power use and nuclear generation offset the need for gas-fired power as the cost of LNG shipments also increased.

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.