Japan imports first LNG cargo from China as utilities try to cut costs
30/08/2019 02:02
(Repeats item issued late Thursday)
* LNG cargo from Hainan exported to Chita- source
* Shipment sold in July below average import prices - govt
data
By Aaron Sheldrick
TOKYO, Aug 29 (Reuters) - 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 tonnes of LNG was shipped from the
Hainan LNG Terminal, which is operated by state-owned CNOOC Ltd,
0883.HK 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. urn:newsml:reuters.com:*:nAZN0233SM
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 show 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 LNG-AS have sunk to near
record lows in recent weeks as a wave of new supply from the
United States and Australia comes onto 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. urn:newsml:reuters.com:*:nL4N24X2V2
They are also buying more LNG on the spot market as part of
this shift in approach. Japanese utilities have previously
favoured 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 9505.T has bought a spot LNG cargo for
delivery in November, while Hokkaido Electric 9509.T is
seeking a cargo for delivery the same month, industry sources
told Reuters this week. urn:newsml:reuters.com:*:nL3N25O1W1 [nL3N25N257
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GRAPHIC: Japan's LNG import prices https://tmsnrt.rs/2FT9wRo
GRAPHIC: Asian spot LNG prices https://tmsnrt.rs/2X2j9Dm
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(Reporting by Aaron Sheldrick; additional reporting by Megu
Jones in TOKYO and Muyu Xu in BEIJING; editing by Christian
Schmollinger)
((aaron.sheldrick@thomsonreuters.com; 81-3-6441-1320;))