News & Media

04 February, 2019

LNG Market News - Japan

(Source: Kaiji Press News 01/Feb/2019)

JOGMEC analyzes China's future LNG imports

Expecting slight rise in first half of 2020s, expansion thereafter

China's LNG import volume reached about 54 million tons in 2018, up 40% from some 38 million tons in 2017. The research division of Japan Oil, Gas & Metals National Corp. (JOGMEC), recently giving a briefing for medium-term outlook on China's LNG imports in Tokyo, predicted, "LNG imports will likely remain flat or be limited to a slight increase during the first half of 2020s as there will be no completion of new and additional LNG receiving terminals until around 2021. Yet, expansion in import volume will become possible in/after mid-2020s." As to China's demand for natural gas in 2019, JOGMEC forecasts, "High growth is still expected, but the increase will likely be moderate compared to the past two years due to economic slowdown and easing of the natural gas switching policy in China."

In 2018, plural LNG receiving terminals kicked off operation in China, and LNG imports further expanded in accordance with conclusion of long-term LNG purchasing contracts. Imports from Australia particularly increased, accounting for about 40% of China's total LNG imports. JOGMEC claims, "China is beefing up domestic production of natural gases, but it is unable to cope with expanding demand. As such, the nation is increasing its import volume." It seems natural gas import via pipelines has also grown by 20% to about 36.5 million tons.

Currently 18 LNG receiving terminals are in operation, with a total receiving capacity of 63.9 million tons. In 2018, three receiving terminals with total capacity of 10 million tons started operation. Other than these, plural new terminals are under construction, but none of them will be completed until around 2021. JOGMEC gave a view, "If the plans progress smoothly, including upgrades, receiving capacity will likely to reach about 75 million tons by around 2021 and to some 100 million tons by around 2023. Import infrastructures will reach their limit for the time being, but further expansion in LNG import volume will become possible in/after mid-2020s."

As to influences to LNG imports from the U.S.-China trade friction, JOGMEC claims, "We believe state-owned oil firms will stay away from LNG procurement from the U.S. and new projects until the Chinese government decides on its policy." China is increasingly concluding new/additional long-term LNG contracts with non-U.S. entities in Canada, Malaysia, Papua New Guinea and so forth.
China has been levying an additional 10% tariff on LNG imported from the U.S. since Sept. 24, 2018. China's LNG imports from the U.S. in January-October 2018 came to around 2 million tons, up 2.4-fold year-on-year, and accounting for 5% of its total LNG imports for the period. Meanwhile, terminals in China accepted 24 LNG carriers for entire 2018, down from 30 ships in 2017, with vessels sharply decreasing in the second half to six units from 25 units. China's statistics show that no LNG was imported from the U.S. in September-October 2018.

Further, LNG shortage sometimes becomes conspicuous in northern China during winter, and a new transport means for hauling LNG from south to north via LNG containers in case of emergency is being studied. JOGMEC said, "Verification test of LNG container haul between China and Japan is also being carried out."

(Source: Nikkei Asian Review 31/Jan/2019)

Tokyo Gas taps British peer Centrica's digital prowess in tie-up

Tech expertise sought for LNG projects and power plants to beat competition

TOKYO -- Tokyo Gas plans to leverage technological assistance from U.K. energy giant Centrica under a new partnership as the Japanese utility battles to keep its turf from eroding further in a liberalized market.

The two companies signed a memorandum of understanding in December, Tokyo Gas President Takashi Uchida said in an interview with Nikkei.

"We hope each of us floats ideas and collaborates in a broad range of fields," Uchida said.

Centrica, the No. 1 gas company in the U.K., also engages in power generation and retail sales of electricity, serving about 27 million customers. One of the "big six" energy suppliers in the country, it has been focusing on digital technology, analyzing electricity consumption data from smart meters to efficiently provide power and gas service to residential customers.

Tokyo Gas wants to collaborate with Centrica on artificial intelligence and digital technology to optimize its operation of liquefied natural gas terminals and power plants. It will also consider rolling out electronic bill payments and working on smartphone-based services for consumers.

The two already have a partnership that includes joint LNG procurement in Mozambique. In addition, under a swap arrangement, Tokyo Gas ships LNG from the U.S. to Europe and in return gets LNG produced in Asia from Centrica. They have swapped several vessels worth of natural gas.

The deal "reduces travel distances and thus cuts procurement costs," Uchida said.

Tokyo Gas is fighting in an intensely competitive market around the Japanese capital after the 2017 deregulation of the retail city gas industry.

The company recently lost 650,000 customers to rivals like the alliance of Tokyo Electric Power Co. Holdings and Nippon Gas. And the city gas market is about to grow even more crowded, with JXTG Nippon Oil & Energy set to enter next month.

"The environment is expected to remain competitive, so we have to stay on guard," Uchida said.

Tokyo Gas aims to keep domestic customers by stepping up bundled sales of gas and electricity. It also seeks to increase its service lineup overseas to lift profits.