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December surge lifts Japan to annual import record in 2012

31 Jan 2013 13:08:30 | glm

Japan's LNG imports climbed by 7.4% year on year to 7.70m tonnes in December, as demand rebounded strongly on the onset of a regional cold snap, detailed Japanese finance ministry data showed on Wednesday.

The figure is a record for December and the third-highest monthly total on record behind January and March 2012, when imports surged above 8m tonnes.

The monthly haul lifted Japan's 2012 imports to 87.31m tonnes, an increase of 11.2% from the 78.5m tonnes record set in 2011, reflecting the step change in LNG procurement as utilities turned to LNG as base-load fuel to compensate for offline nuclear power generation.

The country's main LNG importing electricity utilities bought a record 58.68m tonnes of annual amount as the impact of Japan's continuing stress-test regime was felt leaving two units at Kansai Electric Power's Ohi plant as the only nuclear reactors in operation by the end of the year.

Australia surpassed Malaysia as Japan's biggest supply source, delivering 15.91m tonnes of LNG in 2012, a 13.8% year-on-year increase. The rise from Australia was largely attributed to start-up and ramp-up in deliveries from the Pluto LNG facility to offtakers Tokyo Gas and Kansai Electric.

Qatar cemented its position a key supply source to Japan's utilities, ramping up deliveries by nearly a third to 15.66m tonnes as Qatargas committed more mid-term LNG to key electricity utility buyers, including Tokyo Electric (TEPCO), Kansai Electric and Chubu Electric.

The phased shutdown of nuclear power generation also saw Japanese buyers turn to supplies with a position in the Atlantic Basin for spot and mid-term volumes. More than 11m tonnes of LNG was sourced from the Atlantic Basin, Peru and the Yemen LNG project, which lack long agreements with Japanese buyers.

Nigeria was the dominant Atlantic Basin supplier, with 4.78m tonnes sourced from the six-train Nigeria LNG facility, while UK-headquartered BG Group underlined its role as a key supplier sourcing 2.79m tonnes of LNG from its Equatorial Guinea offtake for Japanese buyers.

The strength of Japan's demand pull, coupled with the contraction in global supply and ample arbitrage opportunities, saw Japan receive its first reload cargoes from Belgium and France. The country also received its one and only Brazilian reload, which arguably illustrated the inefficiency of reloads rather than Japan's demand requirements after the cargo, originally sourced from Qatar discharged in Belgium where it was reloaded to Brazil and subsequently re-exported to Japan, a 24,000-mile voyage rather than the 7,000 miles from Qatar to Japan.

Japan casts wide supply net

The annual figure was lifted by a strong import haul in December, driven by colder-than-average temperatures that spurred a 3.1% rise in electricity demand to 71.5bn kWh, according to separate data published by the Federation of Electricity Producing Companies.

Japan's average LNG import price rose by $0.43/MMBtu to an $15.51/MMBtu on a heating value-weighted basis, partly reflecting the lagged effect of higher crude prices from August to November, the finance ministry data show.

Australia was Japan's largest source of imports for the fifth consecutive month, supplying 1.71m tonnes, a rise of a third from the corresponding period last year.

Japanese buyers sourced 712.661 tonnes from the Atlantic Basin in December, a rise of 11% compared with the 641,916 tonnes purchased in November.

This included delivery of the first LNG vessel to navigate the North Sea Route from the Atlantic Basin to the Pacific. The 54,509 tonne spot cargo was sourced by Gazprom Marketing & Trading from the Snøhvit plant in Norway and delivered on the Ob River to Kyushu Electric's Tobata terminal on 4 December. The cargo was delivered at a weighted price of $13.49/MMBtu, according to the data.

A total of 573,756 tonnes of LNG was sourced from Nigeria alone, including a 59,431 tonne cargo delivered on the Nigeria LNG (NLNG) vessel LNG Enugu to Niigata where Tohoku Electric Power has capacity for $14.70/MMBtu, finance ministry and shipping data show. Another NLNG-vessel, the LNG Benue, delivered a 53,504 tonne cargo to Kyushu Electric's Oita terminal at $13.87/MMBtu.

Japan's most expensive import in December was a 49,191 tonne cargo that was recorded as coming from Peru and delivered for $18.62/MMBtu on a weighted basis, according to the data. However, ICIS analysis based on shipping and port data suggests that the cargo, originally sourced from Peru, was reloaded from Spain on the LNG Leo and on 8 December delivered into Senboku, where Osaka Gas has capacity.

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