Japan Plans For More Lean LNG Despite Uncertainty

12 Jan 2014: Tokyo still sees LNG from the US as a panacea for the country’s widening trade deficit, which reached nearly $11 billion in October. But buyers remain cautious about a possible flood of “super-lean” imports over the next decade. Importers are under enormous pressure from the government to lower their fuel bills, and have publicly backed the shift to lower-priced US supplies. After a flurry of liquefaction tolling agreements at export projects proposed in Louisiana, Texas and Maryland, Japanese players haven’t exactly been inundated with demand from end-users (see LNGWM, Oct ’13). These LTAs cover nearly 17 MMt/y, but power utilities and gas companies in Japan have lined up only 7.4 MMt/y of this volume on a long-term basis. This includes direct deals with project sponsors, such as the LTAs negotiated by Osaka Gas and Chubu Electric at Freeport LNG, or as resale volume purchased on delivered ex-ship or FOB terms from trading houses Mitsubishi, Mitsui and Sumitomo at Cameron LNG and Cove Point. Download here