Japan imports first LNG from China as utilities try to cut costs

The shipment shows the increasing flexibility of the Asian LNG market. (Reuters)
Updated 29 August 2019

Japan imports first LNG from China as utilities try to cut costs

  • Prices for spot LNG in Asia have sunk to near record lows in recent weeks as a wave of new supply from the US and Australia comes on to the market

TOKYO: Japan imported its first cargo of liquefied natural gas (LNG) from China in July as utilities from the world’s biggest buyer of the fuel seek out new suppliers and try to lower costs amid tough competition at home.

The shipment illustrates the increasing flexibility of the Asian LNG market. China has become the world’s second-largest LNG buyer amid a surge in domestic gas usage. However, the country has started to re-export shipments amid a lull in summer gas consumption and Japanese buyers are scooping up the cargoes to reduce their fuel expenses.

The cargo of 70,560 tons of LNG was shipped from the Hainan LNG Terminal, which is operated by state-owned CNOOC, to Chita near Nagoya, where Toho Gas jointly operates an LNG terminal with JERA, according to a source familiar with the matter.

It was delivered at $5.68 per million British thermal units (mmBtu), below Japan’s average import cost of $9.50 per mmBtu for LNG during July, according to Ministry of Finance data released on Thursday.

Toho Gas declined to comment when contacted by Reuters. CNOOC did not immediate reply for a request for comment.

A search through Japan’s official trade statistics shows it is the first LNG cargo from China since 1988, when the Japanese government started publishing import and export figures.

Prices for spot LNG in Asia have sunk to near record lows in recent weeks as a wave of new supply from the US and Australia comes on to the market.

The decline in spot market prices for liquefied natural gas (LNG) is pushing Japanese utilities in Japan to be more aggressive in price reviews built into traditional long-term contracts linked to oil prices.

They are also buying more LNG on the spot market as part of this shift in approach. Japanese utilities have previously favored stability of supply over price, partly because they could pass on the costs to consumers.

The liberalization of Japan’s energy markets means the old guard gas and electric utilities are losing customers to new entrants and they are trying to cut costs.

With summer temperatures peaking, Japanese electric utilities have also been rushing to replenish stocks of the fuel to use to generate power for air conditioning.

Hokuriku Electric has bought a spot LNG cargo for delivery in November, while Hokkaido Electric is seeking a cargo for delivery the same month, industry sources told Reuters this week.


At Davos, innovative products point to a sustainable future

Updated 24 January 2020

At Davos, innovative products point to a sustainable future

  • A single tree that to bear 40 different types of apple

DAVOS: The World Economic Forum is not all about the fourth industrial revolution or the rise of AI.

You can also find all manner of strange and intriguing products on display from biodegradable plastic made from algae to wallpaper made from recycled corn husks.

One stand titled “How do you design a tree?” is part of a conservation effort where a single tree is designed to bear 40 different types of apple.

Another stand displays colored seaweed on a rack, showing how clothes can be dyed in a sustainable, non-chemically corrosive manner.

Propped along a large wall is Fernando Laposse’s wallpaper made of variations of purple corn husks that are reinforced with recycled cardboard and cork to create wallpaper and furniture. The husks come from corn that needs very little water and can be grown in the desert, which makes it all the more sustainable.

“This initiative helps the local economy as it brings in jobs and a resurgence of crafts and food traditions while also ensuring sustainability,” Laposse said.

Another display shows a machine that extracts pellets from a mixture of algae and starch and is used to create a thread that is the base of 3D printing. These sustainable, biodegradable plastics made from algae are being experimented with in different regions.

With the rise of deep fakes — a branch of synthetic media in which a person in an existing image or video is replaced with someone else’s likeness — another stand delivers a warning on the looming dangers of unregulated software.

The Davos forum prides itself on its sustainability, and key topics have included climate, mobility, energy and the circular economy. Everything is recyclable, and participants must download an application in order to keep up with the program and any changes — a move to cut down on paper waste.