Page 4 - AsianOil Week 42 2022

AsianOil COMMENTARY AsianOil

Japan takes steps to

support energy security

Japan is exposed not only to high global gas prices but also the risk of

disruptions in Russian supply.

XXX JAPAN’S government has proposed a series of Japan is also looking to permit state-owned
measures to safeguard against disruptions to Japan Oil, Gas and Metals National Corp (JOG-
WHAT: LNG supply over the coming months, as the MEC) to directly import LNG on behalf of util-
Japan is preparing global energy crisis rolls on, exacerbated by the ities in an emergency. The company has already
measures to safeguard Russia-Ukraine conflict. been allowed to import liquid fuels on behalf
its energy security this One of the measures would see the govern- of utilities. Regulation will be revised later this
winter. ment’s industry ministry step in to redirect LNG month to cover LNG supplies as well.
supplies to where they are needed in the event of
WHY: an emergency, so that gas and power companies LNG woes
There is a risk that some do not run out of the fuel. A new framework will The Russia-Ukraine conflict has clearly tight-
utilities will struggle to be introduced to facilitate this. ened the global gas market considerably, with
get the gas they need. Under the plan, the ministry would serve as Russian supplies to Europe now at an all-time
an intermediary to deliver LNG from operators low. But another factor over the past year has
WHAT NEXT: with sufficient gas in stock to those without it, been supply outages at some major LNG ex-
Europe may swallow up acting on the requests of electricity and gas port plants, including the Freeport LNG facility
more LNG this winter if companies. in the US, which was shut down following an
Russia cuts off pipeline “Both power and gas utilities have secured a explosion in June. The plant is now anticipat-
supply. solid level of LNG inventories for this winter,” an ed to restart some initial operations in early to
official at the ministry told Reuters. “But it would mid-November, assuming no further setbacks.
be better to reinforce the existing framework to Operations at the MLNG DUA plant in
make it easier to accommodate the fuels across Malaysia have also been disrupted since last
the power and gas industries in case of emer- month as a result of a pipeline leak, although the
gencies that make it difficult to procure fuel remaining trains of the Petronas LNG complex
nationwide.” remain online
Japan is one of the world’s biggest LNG The Prelude FLNG plant in Australia finally
importers, bringing ashore 74.3mn tonnes of came back on stream in September, after three
the commodity last year. Since the government’s weeks of strike action. The closure resulted in
decision to phase out nuclear in the wake of the total Australian LNG exports dipping in July
2011 Fukushima nuclear disaster, the country’s to a three-month low of 6.52mn tonnes, from
use of gas, and to a lesser extent coal, has rapidly 7.03mn tonnes a year earlier.
soared, and with no indigenous gas resources of Prior to the war, other long-term outages
its own, it has turned to LNG. have also exacerbated the supply situation.
This alone makes the country’s energy system One example is the Hammerfest LNG plant,
very vulnerable to the global energy crisis. But which closed down in September 2020 after a
the country is even more exposed to risk because serious fire. The terminal was meant to come
its biggest supplier of LNG is the Sakhalin-2 liq- back online in autumn 2021, but its restart was
uefaction plant in the Russian Far East, which delayed repeatedly, until eventually it returned to
the Russian government has seized. operation this spring. ™

P4 www. NEWSBASE .com Week 42 24•October•2022