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Japan Oct 15 LNG stocks hit 2.3 mil mt, indicates low chance of tightness in winter supply: METI

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Japan Oct 15 LNG stocks hit 2.3 mil mt, indicates low chance of tightness in winter supply: METI

Highlights

Current LNG inventory enough for colder than average winter

Making as much efforts as last winter for stable supply: JERA president

Squeezing surplus supply from full runs including at Ichthys: INPEX CEO

Japan's LNG stocks, held by major power utilities, hit around 2.3 million mt Oct. 15, the highest level in five years, indicating a low probability of tightness in winter electricity supply for now, the Ministry of Economy, Trade and Industry said Oct. 21.

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The LNG stocks, which METI had surveyed as part of its response to a tightened power supply-demand balance in January, rose by about 700,000 mt from a year earlier, METI said in its first round of meetings on LNG fuel procurement with presidents and senior executives from Japanese power and gas utilities, upstream companies and trading houses.

"Based on the current inventories, even if the forthcoming winter turns out more severe cold than average year, we should be able to avoid the tightened supply and demand experienced in the [last] winter as long as each company maintains fuel procurements as planned," Shin Hosaka, commissioner of METI's agency for natural resources and energy, said at the meeting.

METI, however, said it does not rule out the possibility of a tightening electricity supply and demand balance, should power demand exceed expectations and if there are unexpected large-scale power source outages.

Emergency readiness

"We request to companies to be prepared for emergency in order to have the energy industry as a whole to respond in the event of tightened power supply and demand by actions including interexchange of LNG beyond industrial barriers," Hosaka told the meeting.

The head of METI's agency for natural resources and energy called on power utilities using oil-fired power plants to be in touch with refiners in advance for smooth procurements.

The meeting was launched as part of METI's efforts to ensure LNG supply for winter, after Japan experienced a power supply shortage last winter because of high demand during extreme cold spells in January, when local power utilities were forced to restrict gas-fired power generation due to low LNG stocks.

That was exacerbated by glitches at coal-fired power plants, low hydropower generation due to droughts, fluctuations in solar power output due to weather conditions, reduced oil-fired power generation capacity and low nuclear power output last winter.

At the meeting, Satoshi Onoda, president of JERA, which had bought 3 million mt of spot LNG for arrival over November 2020-February 2021, said that that the company will "maximize efforts" like it did last winter in order to ensure stable electricity supply this winter.

Takayuki Ueda, president and CEO of INPEX, said that the company will try to squeeze as much "surplus supply" from running and maintaining full operations stably at its LNG plants including at its operated Ichthys project in Australia for winter.