Spot LNG price may rise further toward winter on weather, geopolitical risks: Tokyo Gas CEO

Spot LNG prices may rise further toward winter due to weather, inventory drawdowns and geopolitical risks, Tokyo Gas President and CEO Shinichi Sasayama said Nov. 5.

"Spot [LNG] prices have already risen above $30. Looking ahead to this winter, depending on weather conditions, the pace of inventory drawdowns and the developments you mentioned, there is a possibility that spot prices could rise even further," Sasayama told a press conference in Tokyo, when asked about winter LNG price impact from the EU's ban on Russian LNG imports.

The European Commission remains committed to implementing its planned ban on Russian natural gas imports, set to fully phase in over 2027, Energy Commissioner Dan Jorgensen said Oct. 29.

The EU is set to ban all imports of Russian LNG from Jan. 1, 2027, under legislation approved at the start of this year. Some European companies with long-term Russian LNG contracts can continue to divert some shipments outside the EU until at least late July 2027 under a carve-out in the EU's latest sanctions package against Moscow, approved in July.

"This [spot LNG price] will depend on various factors, including weather conditions and geopolitical risks, such as how the situation in Iran develops following the [US] midterm elections. We will therefore continue to closely monitor price developments," Sasayama said.

Asian spot LNG prices fell sharply Nov. 4 as progress in US-Iran diplomatic talks eased geopolitical risk premiums, outweighing tight prompt fundamentals in Northeast Asia.

Platts, part of S&P Global Energy, assessed JKM, the benchmark price reflecting LNG delivered to Northeast Asia, for December at $31.545/million British thermal unit on Nov. 4, down $1.991/MMBtu, or 5.94%, day over day.

"The question is how the situation in the Middle East will develop [after the US midterm elections]. I think we need to closely monitor how that will affect crude oil prices," Sasayama said, adding that "depending on how crude oil prices move, prices under long-term contracts could also rise" because most of its long-term LNG contracts are linked to crude oil prices.

As a result of its efforts to diversify its LNG procurement sources, contracts and trading flows, he said, "the situation in the Strait of Hormuz has so far had no impact on our LNG procurement, allowing us to maintain stable supplies."

METI working group

Sasayama's comments followed the Ministry of Economy, Trade and Industry's Nov. 4 fifth working group meeting, where industry and company representatives discussed winter electricity and gas supply-demand outlooks, focusing on stable fuel supply, particularly LNG, ahead of the peak-demand season.

The meeting was attended by working-level representatives from electricity and gas industry organizations and companies responsible for LNG procurement, resource development organizations and companies, and trading houses.

METI said the situation surrounding fuel supplies, particularly LNG, remains uncertain amid changes in the international energy landscape and other factors, and continued vigilance will be required this winter to ensure stable electricity and gas supplies.

At the working group meeting, METI said participants shared information on the electricity and gas supply-demand outlook for this winter and other related matters.

While there is currently no situation that would immediately result in tight fuel supplies, METI said it asked electricity and gas companies to continue procuring LNG in a planned and steady manner, while participants also confirmed that, if electricity and gas supply-demand conditions are expected to tighten, the public and private sectors will work together to respond, including by sharing LNG supplies across industry boundaries.

Australia LNG

Asked to comment on its view and response to Australia's domestic gas reservation scheme legislation, Sasayama said, "We are exchanging views not only among ourselves, but also with other companies that import LNG from Australia and Japanese companies involved in production in Australia. Of course, we are also exchanging views with the government."

"My understanding is that various discussions are taking place between the two sides with the aim of minimizing any impact on Japan," Sasayama added. "We will therefore continue to closely monitor developments."

The Australian government introduced the national domestic gas reservation legislation on Oct. 14. The new domestic supply obligation is set at 20% of LNG exports, calibrated to forecast domestic demand, and is scheduled to take effect on Jan. 1, 2028.

Tokyo Gas imported 5.917 million metric tons of LNG from Australia in the fiscal year to March 2026, accounting for 50.9% of its total LNG imports of 11.615 million mt, according to the company.