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AsianOil PIPELINES & TRANSPORT AsianOil

Osaka Gas to purchase more LNG than

usual in upcoming fiscal year

JAPAN JAPAN’S Osaka Gas will buy more LNG than position and then relied on purchasing extra
usual in the financial year beginning in April supply from the spot market in the case of a
The company as it seeks to guarantee a stable supply of the shortage. However, now the company is chang-
is scrambling to super-chilled fuel as experts predict global ing course, choosing instead to be in a slightly
secure supply amid supply will remain tight, the company’s presi- long position amid the higher prices and
expectations of a dent, Masataka Fujiwara, said on March 15. potential risks surrounding supply disruption.
prolonged tight market. Spot LNG prices skyrocketed in 2022 fol- “We made a procurement plan with a mar-
lowing Russia’s invasion of Ukraine as Europe gin, as causing a supply shortage is the worst
sought to wean itself off Russian gas. However, thing,” Fujiwara added.
since mid-December prices have fallen due to LNG purchasers have the ability to exercise
a milder than usual winter in Europe. a contract clause called upward quantity tol-
“Still, we see a risk of the prices surging erance (UQT), which is normally a flexibility
again sometime in the next financial year amid embedded in long-term contracts where buy-
tight global supply as Europe moves further ers can ask for 5% to 10% of extra volumes.
away from Russian gas,” Fujiwara said. Osaka Gas has indicated it plans to use this
Nevertheless, the city gas provider is seek- flexibility.
ing to insulate itself from possible supply Osaka Gas together with JERA and Tokyo
shocks, such as the fire at the Freeport LNG Gas have a contract with Brunei set to expire
export terminal in the US and the pipeline leak this month. The company has yet to reveal
at Malaysia LNG last year. whether it will extend the deal it signed in April
In the past, with more favourable spot 2013 for 10 years to buy a combined 3.4mn
prices, Osaka Gas typically took a slightly short tonnes per year (tpy). ™

P6 www. NEWSBASE .com Week 11 17•March•2023