The Japan Gas Association sees sufficient spot LNG capacity to cover the country's requirements, in spite of an expected surge in demand following the March 11 earthquake, the group's chairman, Mitsunori Torihara, said Monday.
Speaking to the press for the first time since the quake, Torihara, who is also chairman of the country's largest city gas supplier Tokyo Gas, said there was 40 million-50 million mt/year of spot supply capacity globally.
"Today's LNG market is not tight," he said, referring to the expansion of Qatar's LNG production capacity up to 77 million mt/year in the last few years.
He said gas utilities were not seeing any supply concerns, but he added that he was concerned over rising LNG prices. Spot prices were on the rise due to additional spot demand, he said, while long-term prices were up due to oil prices rising on Middle East concerns.
Long-term LNG contracts in Asia tend to be linked to the Japan Customs Cleared crude oil price.
Asked whether gas utilities were considering diverting LNG supplies to the power facilities affected by the quake, Torihara said the gas utilities had not "immediate plans" to divert LNG. But, he added, they are thinking of prioritizing processed gas supplies to Tokyo Electric Power Co for use in its gas-fired power plants.
Similarly, Tokyo Gas intends to supply Tepco with a total of 2 GW of power capacity from its gas-fired power plants in Sodegaura, Ogishima and Kawasaki during the peak summer season, Torihara said.
Of the JGA's members' city gas facilities that were affected by the earthquake, around 99% were now restored, he said, and only Ishimaki Gas' facilities in northeastern Japan yet to be restored.
Sendai City Gas, which saw its LNG import terminal shut down by the quake, was procuring sufficient gas for its requirements from Niigata by pipeline, Torihara said.
Sendai's Shin Minato terminal was not damaged in the earthquake itself, he said, but many of its gas processing facilities were submerged in the following tsunami. They would require an undisclosed period of time for repair work, he added.
But the terminal's berth, underground storage tanks and pipelines were not damaged by the tsunami, he said.
Torihara said it was inevitable in the wake of the March quake that there would be delays in nuclear projects, and that the country would review its overall energy policy.
But it was very important for Japan's future to maintain nuclear power generation, he said.
