Page 6 - EurOil Week 16 2021

EurOil COMMENTARY EurOil

Total notes that it is the world’s second-largest Pavilion also comes as no surprise, given that the
privately owned LNG player, with a global port- Singaporean company launched a tender a year
folio anticipated to reach nearly 50mn tonnes ago for LNG deliveries with their carbon emis-
per year (tpy) by 2025 and a global market share sions quantified. The eventual goal of this was
of around 10%. Its push to decarbonise LNG carbon neutrality.
therefore has the potential to have a significant Pavilion subsequently reached two separate
and far-reaching impact. supply deals – one with Qatar Petroleum (QP)
and one with Chevron – that involve each cargo
Japanese push being accompanied by a statement of its associ-
For Japan, one of the leading importers of LNG, ated GHG emissions from wellhead to discharge
decarbonising the fuel is one of numerous steps port. The company is also working with others to
being explored as the country targets net-zero develop a methodology to quantity and calculate
greenhouse gas (GHG) emissions by 2050. The emissions from LNG.
latest moves being reported this week come after Details of who supplied this first carbon-neu-
the Carbon Neutral LNG Buyers Alliance was tral cargo to Pavilion were not disclosed. How-
formed in March. The alliance includes Tokyo ever, the company said the emissions from the
Gas and 14 other companies that use city gas cargo would be offset by retiring a correspond-
across various industries. ing amount of carbon credits sourced from its
As with Total, the latest news on Tokyo portfolio of carbon offset projects. It added that
Gas illustrates progress on an initiative that the credits used for the offset are from Natu-
was already underway. The company, which ral Climate Solutions projects certified under
is the largest seller of city gas in Japan, bought the Verified Carbon Standard (VCS) and Cli-
its first carbon-neutral LNG cargo in 2019, mate, Community and Biodiversity Standard
when such cargoes were still in their infancy. (CCB) – Evio Kuinaji Ese’Eja Cuana in Peru and
Now Tokyo Gas says it expects to see a rise Liangdu Afforestation in China. Both projects
in demand for carbon-neutral LNG from are designed for the protection and restoration
end-users. of forests, according to Pavilion.
The company started supplying 800,000
cubic metres per year of carbon-neutral city gas What next?
to the Yakult Central Institute on April 1, mark- LNG players typically do not discuss commer-
ing the first use of carbon-neutral city gas supply cial arrangements, including the prices paid for
to the Japanese beverage industry. This comes their LNG supplies, and the recent deliveries and
as the Japanese government has called on the other developments are no different. Nonethe-
country’s industrial sectors to decarbonise their less, carbon-neutral cargoes will be more costly
heating demand, and indeed has identified car- than standard LNG deliveries, and there is scep-
bon-neutral LNG as being among the possible ticism over how many players will be willing
solutions. to buy such cargoes when economics remain
As for the carbon-neutral LNG cargo received important.
by Toho Gas, the shipment is reported to have On the other hand, those moving forward
been supplied by Diamond Gas International, a with initiatives to decarbonise LNG include
subsidiary of Mitsubishi, which also bought the some major players, and their participation
credits to offset the cargo’s emissions. Few other will almost certainly help carbon-neutral LNG
details related to this cargo have emerged, but it to become more widespread. As deadlines for
illustrates the gradual growth of the carbon-neu- national decarbonisation targets loom, the pres-
tral LNG trade in Japan. sure to embrace carbo-neutral LNG will likely
rise.
Pavilion’s plan That said, carbon-neutral LNG is still in its
The delivery of a carbon-neutral LNG cargo to early days, and much is unknown. ™

P6 www. NEWSBASE .com Week 16 22•April•2021