LNG

JERA Co. Inc., Japan’s biggest liquefied natural gas importer and utility company, has approved a deal to sell part of its stake in the Freeport LNG export plant in Texas to another Japanese company.

Russian liquefied natural gas production has risen in 2022 while overall natural gas production by Gazprom and other companies has dropped because of Russian gas cut-offs in retaliation for US and European Union-led sanctions imposed for the invasion of Ukraine.

Mitsubishi Corp., the Japanese trading house with widespread LNG assets from Canada, to the US Gulf Coast to the Asia-Pacific and Russia, said it was retaining its stake for now in the Sakhalin LNG export project in the Russian Far East.

This Mitsubishi Natural Gas division’s assets and volumes are concentrated in the Asia-Pacific region, Russia, the US, Canada and Oman.

“We are working on initiatives to strengthen our existing business platform and develop new projects in traditional LNG-producing countries such as Brunei, Malaysia, Indonesia, Australia and Oman,” said the company.

Mitsubishi’s project stakes in addition to Sakhalin LNG in Russia include Sempra’s Cameron LNG in Louisiana, Shell’s LNG Canada project, Brunei LNG, Malaysia LNG, Oman LNG, Tangguh LNG in Indonesia and the Donggi Senora LNG plant, also in Indonesia.

It also has volumes from the Chevron-operated Wheatstone LNG project in Western Australia and the North West Shelf plant operated by Woodside Energy.

“Earnings were increased in the LNG-related business, despite trading losses in the LNG sales business,” said Mitsubishi in its fiscal first-half earnings statement.

Price benefits

Like global energy companies, Japanese trading houses have benefited from skyrocketing oil, gas and coal prices in 2022.

For the April-September first half, Mitsubishi’s net profit nearly doubled to a record 720 billion yen ($4.90Bln), a rise of 97 percent from the 360.56Bln yen ($2.45Bln) logged in the fiscal first half of 2021.

Revenues for the six months came to 10.72 trillion yen ($73.05Bln) compared with 7.72 trillion yen ($57.63Bln) in the first half of 2021.

“This was mainly due to increased market prices and transaction volumes,” said Mitsubishi.

“In addition to Natural Gas and Mineral Resources, which were bolstered by market factors, Automotive & Mobility, Power Solution, Industrial Materials and other segments are forecast to see greater earnings than originally forecast,” said the company.

Mitsubishi is an investor and trader in LNG along with the other Japanese trading houses such as Mitsui & Co, Marubeni Corp and Sumitomo Corp.

Sakhalin situation

On Russia, Mitsubishi said the company’s main business in Russia consists of a financial service business in the Automotive and Mobility segment and investment in the LNG-related business as part of its Natural Gas division.

“As of September 30, 2022, the carrying amount of total assets related to the company’s business in Russia was 209.91Bln yen ($1.43Bln),” said Mitsubishi.

“The company holds a 10 percent ownership interest in Sakhalin Energy Investment Company (SEIC), which has been engaged in LNG-related business in Russia, and accounts for this investment as a financial asset,” explained Mitsubishi.

It said that based on the Russian Federation presidential decree issued on June 30, 2022 and a further resolution, a new company, Sakhalin Energy LLC (SELLC), was established to take over the operation of this LNG business, and the rights and obligations of SEIC were transferred to SELLC.

“Mitsubishi submitted its notice to continue ownership in the LNG-related business to the Russian government and received approval on August 31, 2022. As a result, the company continues to hold a 10 percent ownership interest in the LNG-related business,” it added.

“However, the details related to the operation of SELLC, including the terms of the LLC members agreement, will need to be discussed once the LLC members composition of SELLC will be determined,” said Mitsubishi.

“As such, there remains uncertainty surrounding this investment,” it declared.

Indian liquefied natural gas imports have plunged by 19 percent amid a continued 2022 decline in the nation’s LNG deliveries because of a slowing economy, a tighter gas market and the falling value of the rupee against the dollar that makes shipments more expensive.

North Asia spot liquefied natural gas cargo prices increased while the European Union benchmark Dutch Title Transfer Facility price gained even more ground above $40 per million British thermal units as winter supply fears offset storage gains and a rise in liftings from global liquefaction plants.

Indian Oil Corp. (IOC), the country’s main oil refiner and importer and the owner of the nation's only East Coast LNG import terminal at Ennore, posted a 16 percent increase in net profits even as margins were tight in the petrochemicals industry and losses were made on partly subsidized fuels.

North Asian liquefied natural gas spot prices were overshadowed by a renewed surge in the Dutch Title Transfer Facility wholesale futures price to over $40 per million British thermal units while US Gulf Coast prices jumped because of the new politically fixed supply line to Europe.

Oil prices increased more than 3 percent on expectations the leading crude-producing nations would agree to cut output as the coronavirus continues to depress demand while natural gas and LNG prices remained flat, weighed down by excess supplies.

Saudi Aramco, the company with LNG plans and behind the global energy turmoil because of the Saudi government pledge to increase crude oil production, still has its shares trading at a high level of 30.90 riyals ($8.24) on the Saudi Tadawul stock exchange.