Japan’s Sep 15 LNG stocks at 2.5 mil mt; utilities secure enough for winter: METI
Japan’s LNG stocks, held by major power utilities, rose to about 2.5 million mt Sept. 15, up from more than 2.2 million mt on Aug. 15, the Ministry of Economy, Trade and Industry said Sept. 24, and confirmed that the utilities have secured sufficient LNG for winter for now.
LNG stocks, which METI had surveyed as part of its response to tightened power supply-demand balance in January, were little over 2.4 million mt at the end of August, well above the four-year average of around 1.7 million mt, and up from 1.6 million mt a year ago, according to documents presented at METI’s electricity and gas policy subcommittee.
“Normally we see LNG stocks decline in the summer after having increased usage corresponding to the seasonal demand rise, however, we are seeing an increase [in stocks] instead of a decline currently in this fiscal year,” Kaname Ogawa, director of METI’s electricity infrastructure division, told the subcommittee.
“We will be closely monitoring [the stocks] toward autumn,” he said.
METI surveys the major power utilities twice a month on their actual LNG stocks compared with what was planned.
METI also released during the subcommittee meeting results of its survey of the power utilities’ LNG procurement for winter.
One power utility reported to METI that it sees a more realistic approach to securing winter LNG supplies from short-term contracts going into fiscal year 2022-2023 (April-March) instead of buying spot cargoes amid soaring prices.
Another power utility reported to METI that it had secured a majority of its winter LNG requirement by signing mid-term supply contracts in order to reduce its dependency on spot procurement, but has made room for spot cargoes when in need.
A third power utility also reported to METI that it has secured sufficient LNG for winter from its existing long-term contracts, and it does not plan to procure spot cargoes.
“At present, we understand that [the utilities] have secured sufficient volumes [of LNG] for winter,” Ogawa said. “However, [the utilities] are not procuring fuels, considering the risk of a significant increase in demand, or a reduction in supply for the time being.”
Japan experienced a power supply shortage last winter because of high demand during extremely 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.