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Japan pledges $10bn for global LNG projects
JAPAN
THE Japanese government has pledged $10bn of both public and private funding for liquefied natural gas (LNG) projects around the world.
Japanese Minister of Economy, Trade and Industry (METI) Isshu Sugawara said on Sep- tember 26 that the investments would mainly be earmarked for upstream, midstream and down- stream LNG projects in Asia.
“On top of Japan’s commitment two years ago of investing or financing more than $10bn in energy supply chains, we are making a fresh commitment of additional and collective $10bn [in] funding from both public and private sec- tors,” Sugawara said during a keynote speech at the annual LNG Producer-Consumer Confer- ence in Tokyo.
Former trade minister Hiroshige Seko made the original commitment at the same conference in 2017, though the funds were mainly allocated to upstream projects such as LNG Canada and Mozambique LNG, in which Mitsubishi and Mitsui & Co. hold stakes respectively.
Sugawara added that the government would train 500 experts in the LNG technology to add the nearly 500 that Japan has already trained in recent years.
“By making these commitments to help develop the global LNG market, Japan will work hard to reinforce global energy security,” he said. His comments come in the wake of recent attacks on key Saudi Arabian oil production facilities, which has led to an escalation of tensions in the volatile region.
While it might seem counterproductive for Japan, the world’s largest importer of LNG, to support infrastructure projects in other coun- tries, this strategy is a response to a specific set of circumstances.
Spot LNG prices may have fallen this year, but most pricing in Asia remains driven by the oil link, making the feedstock fairly expensive. As Japan turns its nuclear power plants (NPPs) back on – in a move backed by political will and judicial rulings – LNG faces competition.
Given this pressure, it is sensible for Japanese companies to bolster alternative destinations for contracted supplies. This is given added weight when considering that energy trader JERA revealed in mid-September that it had successfully asked some of its long-term sup- pliers to drop destination clauses from existing contracts.™
Pavilion wants European LNG for Asian power
SINGAPORE
SINGAPORE-BASED Pavilion Energy is target- ing new markets in Europe as well as expanding in Asia as the gas importer and marketer aims to become a global trader of LNG.
Pavilion’s group CEO, Frederic Barnaud, told Reuters that the company was anticipating a turnover of $3bn next year, with its Europe portfolio comprising half of this amount while Singapore would account for the rest.
This follows Pavilion’s acquisition in June of the LNG assets of Spain’s Iberdrola, which dou- bled the company’s portfolio and gave it access to Atlantic supplies and European regasification terminals. In the wake of the acquisition, Pavil- ion is planning to open its European headquar- ters in Madrid in January 2020. The company is aiming to boost its global headcount to 150 by adding around 40-50 positions at its Madrid office.
According to Barnaud, the company will anchor its global LNG business around three markets – Singapore, Spain and the UK.
Pavilion is owned by Singapore’s sovereign wealth fund, Temasek Holdings. It is a kay player in Singapore’s power sector, supplying one-third of Singapore’s downstream natural gas demand, and is seeking more flexibility in where it buys
and sells LNG in a changing market.
US LNG is taking an increasingly larger share
of the market, while a growing focus on environ- mental goals is compelling more countries to consider switching from coal to natural gas for power generation and industrial use.
“We are not looking at extremely aggressive or taking excessive risk in the market; we are looking at being agile and reasonably balanced in our supply,” Barnaud said.
The company is intending to re-export LNG from Singapore to nearby countries, seeking to take advantage of the city-state’s geographical proximity to centres of Asian LNG demand such as Japan and South Korea. This would make the company well placed to supply feedstock to gas- fired generating capacity being developed in markets Thailand, China and Japan.
According to Barnaud, the company is in talks with LNG terminal operator Singapore LNG (SLNG) to extend its storage lease, which is due to expire in March 2020.
Pavilion has also indicated its interest in a potential fifth LNG storage tank that SLNG is considering building, he said. The tank space would allow the company to break up large car- goes of LNG into smaller ones for re-export.™
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w w w . N E W S B A S E . c o m Week 40 08 •October•2019