News & Media

14 June, 2019

LNG Market News - Japan

(Source: Nikkei Asian Review 13/Jun/2019)

Exclusive: Russia to boost LNG output fivefold to supply Asia

Utilizing the Arctic, Moscow eyes 20% global market share, energy minister says

MOSCOW -- Russia aims to increase its liquefied natural gas output about fivefold by 2035 to capture about 20% of the global market.

The country envisions up to 70% of its LNG exports by then going to the Asia-Pacific region, through the Arctic Ocean shipping route.

Energy Minister Alexander Novak told Nikkei in Moscow that Russia's government intends to strengthen its cooperation with Japan in terms of funding and technology for the LNG and related sectors.

Japanese Prime Minister Shinzo Abe and Russian President Vladimir Putin are expected to discuss economic cooperation in areas including energy when they meet in Osaka on June 29 on the sidelines of the G-20 summit. The leaders will also discuss a peace treaty and other matters between the countries.

Novak could join Putin's delegation.

Russia's current LNG output is about 28 million tons a year. This combines output from the Sakhalin-2 project, in which Japanese general traders Mitsui & Co. and Mitsubishi Corp. participate, and the Yamal LNG project in Arctic Russia.

The plan is to raise the total, which now represents around 6% of global demand, to between 120 million tons and 140 tons by 2035, according to Novak.

Qatar and Australia each accounted for over 20% of the global LNG market in 2018. Russia's goal is to rival these producers as well as the United States in LNG output.

Novak said the Asia-Pacific region is home to some of the world's biggest LNG markets, and that Russia expects to boost exports to Japan, China, India, South Korea and Vietnam.

Russia also exports LNG to Europe but has hastened the introduction of a planned Arctic Ocean shipping route so that 60% to 70% of its exports will go to Asia-Pacific, Novak said.

Russia hopes to attract Japanese technology, loans and investments to its LNG sector, Novak said, adding that Moscow welcomes foreign partners, including Japan.

He also expressed hope that final-stage negotiations between Russia's Novatek and Japanese companies, including Mitsui, regarding investments in the Arctic LNG 2 project will soon come to fruition.

Russia's annexation of Crimea in 2014 triggered sanctions from the West. Novak said there is a possibility that the sanctions could apply to the LNG deals. He added that Russia will consider procuring funds in currencies other than the dollar as a way to maneuver around the sanctions.

(Source: Nikkei Asian Review 13/Jun/2019)

Japan’s Inpex to build $18bn onshore LNG project in Indonesia

Largest Japanese-operated plant looks to export to trade-war hit China

TOKYO -- Japanese oil and gas company Inpex is set to agree in principle with the Indonesian government to build a liquefied natural gas plant in Indonesia, Nikkei learned Friday.

With an estimated total cost of 2 trillion yen ($18.4 billion) and an annual production of about 9.5 million tons a year, it will become one of the largest LNG plants operated principally by a Japanese company. The plant is expected to go online in the late 2020s.

In addition to selling to the Japanese market, the company is looking elsewhere in Asia, such as China, which is trying to diversify its LNG suppliers amid a trade row with the U.S.

Inpex is expected to sign off on and announce the deal as early as Sunday.

The company will develop the Abadi LNG project in the Masela gas block in eastern Indonesia, in which it acquired an interest in 1998. The block is 65% controlled by Inpex and 35% by British-Dutch oil company Royal Dutch Shell.

The initial plan was to build a lower-cost offshore plant around 2020, but the company was forced to rethink its plan after the Indonesian government said in 2016 that the project would be changed to an onshore plant, which will create more jobs.

The project will be finalized if Inpex and the Indonesian government agree on the revised plan. The two parties will discuss the size and other details of the project before actually moving on to construction.

Inpex launched the 4-trillion yen Ichthys LNG project in Australia in 2018, becoming the first Japanese company to lead the development of a major LNG project. That, combined with the new Abadi LNG project, will come to 12 million tons in terms of interest, making Inpex one of the biggest LNG developers among Japan's oil majors.

The world is moving toward lower-carbon energy. LNG-based power generation, which has low carbon dioxide emissions relative to other fossil fuels, is growing rapidly as an alternative to coal. Global LNG demand is expected to jump 160% to 800 million tons in 2050, from about 300 million tons in 2018.

Whilst every effort has been made to ensure the accuracy of the information contained herein, Inchcape Shipping Services (ISS) accepts no liability nor makes any representations or warranties of any kind, express or implied, as to its completeness, accuracy, reliability or suitability.