Japan increases LNG flexibility through collaboration with S.Korea and Italy

Japan agreed to cooperate with South Korea and Italy in the procurement of LNG. It is the second largest LNG importer behind China, which seeks more flexibility while strengthening energy security.

JERA, Japan’s largest utility company, and South Korea’s Korea Gas Corp. (KOGAS), a major buyer of LNG, are working together on joint procurement, cargo exchanges and other forms of collaboration, the Japan Ministry of Economy, Trade and Industry said in a Sunday statement.

The South Korean Ministry of Trade, Industry and Energy, which co-signed the statement, said that the governments of the two countries expected this endeavor to serve as a starting point for new LNG collaboration between Korean and Japanese firms.

Separately the Japan Organization for Metals and Energy Security, backed by the government, signed a preliminary deal with Italian energy giant Eni for a cooperation on LNG procurement. Eni is also seeking investors for its LNG project.

On Sunday, Eni director of global gas and LNG portfolio Cristian Signoretto told reporters at a LNG conference in Hiroshima that "we already deal with Japanese customers on a temporary basis, and we'd like to extend this collaboration to a longer-term basis."

Japanese buyers are looking for contracts that are more flexible, shorter in duration and allow for resale. This allows the companies to divert cargoes when demand drops. Japan is also increasing its own LNG trade in the region.

Yumiko Yao said that Tokyo Gas, Japan’s largest city gas provider is already working with partners to procure LNG in a joint procurement, which will strengthen its emergency response capability.

JERA has been designated by the Japanese Government to secure a cargo of LNG each month, approximately 70,000 metric ton, from December to Febraury, in preparation for heating season of the country's Strategic LNG Buffer (SBL).

Yuya Hasegawa, division director of Japan's Ministry of Economy, Trade and Industry, said on the sidelines of a conference that Japan will prepare cargoes to be sent for the SBL during this heating season. (Reporting and editing by Christian Schmollinger; Katya Golubkova)

(source: Reuters)