Japan to provide support to utilities for LNG procurement

Japan's Minister of Economy, Trade and Industry Yasutoshi Nishimura arrives at Prime Minister Fumio Kishida's official residence in Tokyo, Japan August 10, 2022. REUTERS/Issei Kato

TOKYO, Sept 29 (Reuters) - The Japanese government will provide support through public financial institutions to help utilities secure liquefied natural gas (LNG) amid a surge in spot prices, the industry minister said on Thursday.

"The Japan Bank for International Cooperation (JBIC) and other public financial institutions will offer support to Japanese companies in procuring LNG to ensure adequate fuel supplies," Yasutoshi Nishimura, the industry minister, told an LNG Producer-Consumer Conference.

"We believe such a move will contribute to stable LNG supply in Asia," he said.

Japan wants to avoid an energy crunch by offering financial support before winter, when heating demand is expected to increase. Spot LNG prices remain at high levels amid a risk of supply disruption from Russia given its war with Ukraine.

Details of the planned support were not given, but JBIC will provide low-interest loans to electric power utilities and city gas companies to buy the super-chilled fuel from the spot market, the Nikkei business daily reported earlier on Thursday, without citing sources.

Japanese utilities buy the bulk of their LNG through long-term contracts, but about 20% comes from the spot market.

Asian spot LNG prices have skyrocketed this year, hitting a record high in August, though they since have eased because of high inventory levels and governments' efforts to curb demand in Europe. There are, however, market fears that a cold winter in Europe could see prices return to record levels.

Japan imports about 10% of its LNG from Russia, mainly from Sakhalin-2.

It would cost Japan more than 1 trillion yen ($6.9 billion) to buy 6 million tonnes of LNG a year from the spot market if shipments from Russia were stopped completely, the Nikkei said.

($1 = 144.3700 yen)

Reporting by Yuka Obayashi; Editing by Jamie Freed, Kirsten Donovan

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