Japan's Osaka Gas is keen to resell and trade its offtake volume from the US Freeport LNG to boost profits and flexibility in its LNG procurement, the president of the gas utility said Wednesday.
"We will be able to lift Freeport LNG cargoes that have no destination clauses. We then want to resell as much of this volume as possible," Osaka Gas president Takehiro Honjo told a press conference on Wednesday.
"This LNG is Henry Hub-linked and we could consider not only just bringing it back to Japan but also other options such as swapping cargoes with those in Southeast Asia, Europe. It's not too much to say that we invested in the Freeport project so that we can trade."
Osaka Gas has a natural gas liquefaction tolling agreement with the Freeport project on the Texas Gulf Coast, which is expected to start in 2018, allowing it to take 2.2 million mt/year of US-sourced LNG with no destination restrictions.
Honjo said low oil prices would reduce the competitiveness of US LNG but needs to see how energy prices would pan out in 2018.
Some buyers want to diversify their pricing models away from traditional oil-linked ones, an Osaka Gas official said.
Osaka Gas could choose not to liquefy and sell back gas into the US pipeline if US gas prices are higher, the official said.
Honjo told the conference that Osaka Gas plans to boost investments in upstream projects with the aim of increasing its equity lifting to 30% of its overall LNG procurement from less than 10% currently.
However, Honjo said he does not currently see any attractive LNG projects to invest in even after the recent oil price slump.
For fiscal year 2014-15 (April-March), Osaka Gas procured 7.7 million mt of LNG, of which 39% was delivered on a FOB basis.
