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Tokyo Gas to buy majority stakes in LNG projects

Oilfield Technology,

In a bid to reduce the cost of imports, Japan’s largest gas supplier, Tokyo Gas Co., is intending on investing heavily in liquefied natural gas (LNG) projects in Southeast Asia or Africa. The company will look to buy majority stakes in plants that generate in excess of 3 million tpa of LNG, says executive vice president Shigeru Muraki. Muraki highlighted that the company would prefer to invest in “mid-sized” projects, as this would increase their control of operations. Speaking at the World Energy Conference in Daegu, South Korea, Muraki alluded to the likelihood of undertaking co-ventures with other Japanese companies such as JGC Corp and Chiyoda Corp.

International disparity

In Japan, LNG fuel costs four times as much as that of the US. Estimations reveal that the US paid a medium of US$ 3.64 per million Btu in July, in the same month Japan paid US$ 16.37 per million Btu. Addressing this disparity is a crucial issue for the nation, Japan’s trade and industry minister Toshimitsu Motegi said in September. Higher LNG import costs saw Tokyo Gas’s operating expenses rise by 9.3% in the Q4 2013. In order to avoid such oscillations, the company intends to expand its LNG supply sources by 2020.

This fiscal year, the company imported 10.7 million t. Over the next fiscal year, it predicts imports to be at 12.1 million t, a 14% increase. Figures suggest that sales are growing at a yearly average of 3%, and, the company’s management plan predicts gas sales to be 22 billion ft3 by 2020.

Japan 2020

In 2020 Japan is due to hold the 2020 Olympic Games. Muraki observed that gas sales might improve on this objective. “It really depends on how Japan’s economic environment gets supported. And it’s also up to how gas demand for power generation and other industrial sectors will grow.”

Tokyo Gas is seeking to buy 1.4 million t. of LNG from the Cove Point terminal in the US state of Maryland. The company has said that trading this fuel with buyers in Europe is an option. “The purpose of the LNG trade is to adjust supply and gas demand in Japan,” Muraki posited. “We believe we can minimise the big difference in prices by connecting the two markets in the east and west.”

Edited from various sources by Ted Monroe

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