LNG

Japanese liquefied natural gas imports increased for a second month with more shipments being supplied by Asian nations and the US at much lower prices while deliveries declined of thermal coal for power generation.

Deliveries of LNG to the nation’s regasification terminal network rose by 6.4 percent in October 2023 to 5.42 million tonnes, or 80 cargoes, from the 5.08MT, or 75 shipments, received in October 2022, according to preliminary trade data from the Japanese Finance Ministry.

Imports in the previous month of September had risen by 3.8 percent to 5.52MT from the 5.32MT received in September 2022.

The Ministry figures also showed that LNG cargoes cost 37.6 percent less in October2023 at 495.56 billion yen ($3.31Bln) compared with 794.76Bln yen ($5.30Bln) in October 2022.

Deliveries of thermal coal to Japanese ports dropped by 5.1 percent year-over-year to 8.61MT.

Asia steady

The Ministry data showed the imports of LNG last month from Asian nations like Malaysia, Indonesia and Brunei increased by 26.6 percent from October 2022 to 1.19MT. 

Middle East shipments from countries such as Qatar increased by 12.2 percent year-over-year to 421,000 tonnes.

Deliveries from US liquefaction and export plant increased by 175 percent to 568,000 tonnes, though the total was less than the previousmonth’s 707,000 tonnes.

Russian LNG deliveries to Japan fell by 4.6 percent to 506,000 tonnes.

The balance of deliveries to Japan from Australia and the spot market in October 2023 amounted to 2.73MT, which was less than the previous month’s 2.89MT and the 2.92MT logged for this segment in October 2022.

Japan had regained the global No. 1 spot as an LNG importer from China in 2022 with its 72MT of volumes, though the pace of Chinese deliveries has increased in 2023.

Nuclear competition

Japan is also using more nuclear power and intends to bring other reactors on line over the next year or so as public opposition lessens with energy security taking priority.

Almost a dozen reactors are now back in operation compared with the 54 that were online in 2011 before the Fukushima disaster and which had supplied around 30 percent of Japan’s energy needs.

The latest nuclear restart was the Takahama-1 plant owned by LNG importing utility Kansai Electric Power Company and brings to 11 the number of plants in operation from the 33 that are capable of re-starting. 

Japan’s Nuclear Regulation Authority is examining the re-start proposals for 10 more N-plants. 

Among them is Chugoku Electric Power’s plans to restart the No. 2 reactor at its Shimane nuclear power station in August 2024.

The 11 restarted reactors so far are: Genkai-3 and Genkai-4, Ikata-3, Mihama-3, Ohi-3 and Ohi-4, Sendai-1 and Sendai-2 and Takahama-1, Takahama-3 and Takahama-4.

Japanese liquefied natural gas imports were still in sharp decline with more competition coming from thermal coal and nuclear and as storage levels increased under government energy security policies ahead of the Northern Hemisphere winter season.

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.

Japan Oil, Gas and Metals National Corp. (Jogmec), the agency helping secure a stable supply of oil and natural gas and other resources, has just published the results of two surveys on the volume of LNG handled by Japanese companies and the current status of destination restrictions in LNG sales and purchase agreements.

Jogmec was set up by the Tokyo Government in 2004 and has the full cooperation of all Japanese companies engaged in LNG.

The agency said that the latest surveys were aimed at “improving the flexibility and liquidity” of the LNG market to enhance energy security.

The survey on the “LNG Handling Volumes of Japanese Companies” revealed that they handled around 110 million tonnes of LNG in the fiscal year 2021.

The second survey on the “Destination Clauses and Price Indices in LNG SPAs” showed that the contract quantity with destination restrictions were improving for 10-year contracts through 2030.

“About 45 million tonnes, or 53 percent of the total, in the fiscal year 2021, had destination clauses compared with 21 million tonnes, or 43 percent of the total, in the fiscal years through to 2030,” said Jogmec.

LNG handled

“The LNG volumes handled by Japanese companies last year came to 109.57MT, showing a slight decrease of 0.73MT from the previous year. However, the Japanese companies have continuously achieved 100MT since fiscal 2019,” said the report.

Jogmec also noted that the FY2019 and FY2020 actual figures had been revised in this latest survey due to corrections of reports from the surveyed companies.

LNG imports in FY2021 totaled 71.46MT, a decrease of 4.9MT from the previous year, while the volume of the “external trade” increased by 4.17MT to 38.11MT, resulting in the LNG handling volume in FY2021 being at almost the same level as in FY2020.

The second survey looked at 10-year contracts from FY2021 through FY2030 and based on the annual contract quantity (ACQ).

The ACQ of the fixed-term SPAs concluded by Japanese companies was approximately 84MT in FY2021 and will amount to 49MT through FY2030.

As of FY2021, the ACQ for Delivered Ex-Ship (DES) and free-on-board (FOB) terms and their respective shares were approximately 50MT, or 59 percent, for DES terms and 34MT, or 41 percent, for FOB terms.

“As of FY2030, as the ACQ declines, the ACQ for DES and FOB terms is also to decrease to approximately 25MT and 24MT respectively,” said Jogmec.

Woodside, the Australian LNG plant operator, has completed the sale of a 49 percent non-operating participating interest in the second Pluto LNG train under development to Global Infrastructure Partners (GIP), one of the world’s leading specialist energy infrastructure investors.

JERA Co. Inc., the Japanese LNG buyer of 35 million tonnes per annum of volumes and with control of a fleet of 20 LNG carriers, has drawn up measures to address supply and demand issues in Japan through the Northern Hemisphere summer season.

Japanese spot LNG prices for contracted and delivered cargoes increased in December jumped by. $2.20 per million British thermal amid growing demand for cargoes in North Asia.

Tokyo Gas, the Japanese utility and energy company with a liquefied  natural gas portfolio of 14 million tonnes per annum and a fleet of 10 ships and four import terminals, has launched a new company brand in Japan and is planning to launch a separate LNG trading division to boost profits.

Japanese energy major Inpex Corp. has achieved completion of the project financing contracts for its Ichthys LNG export plant at Bladin Point near Darwin in the Australian Northern Territory after costs and delays multiplied over several years.

French energy major Total said it signed an agreement to sell 4 percent of its stake in the Australian Ichthys LNG export project in the Northern Territory for US$1.6 billion to operator Inpex Corp. of Japan.