Osaka Gas expects limited impact from Freeport LNG shutdown

Share this article Japan's utilities are looking to export liquefied natural gas (LNG) overseas. Credit: GreenOak/Shutterstock.

Japan's Osaka Gas[1] expects the shutdown of the Freeport LNG facilities in the US to have minimal impact on market dynamics for LNG. According to Reuters, speaking[2] at a press conference on Wednesday, president of Osaka Gas Masataka Fujiwara said: "Our procurement volume from Freeport may fall slightly due to the issue, but we remain in a comfortable position in terms of LNG procurement, thanks to the mild winter conditions.

I don't see it as significantly affecting our supply and demand balance." Last week, Freeport LNG shut down[3] the Train 2 liquefaction unit at its Texas plant, and Train 1 will be closed soon as the company expects inspections and repairs at both units to be completed by May. As the third-biggest LNG export plant in the US, Freeport LNG supplies Osaka Gas with 2.32 million tonnes of the cooled fuel every year.

Fujiwara sees natural gas as crucial to the energy transition. He said: "Basically, we plan to renew our long-term LNG contracts, though term length would depend on discussions with suppliers. We have a large investment in North America, and we want our business to keep moving forward in a stable manner."

At the beginning of March, a study[4] found that a fall in demand for LNG in Japan could cause domestic oversupply of the energy source. Japan once consumed all the LNG it imported, but falling consumer demand is forcing Osaka Gas, along with the nation's other major utilities - JERA, Tokyo Gas and Kansai Electric - to consider exporting their surplus, putting them in competition with global suppliers.

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According to the Institute for Energy Economics and Financial Analysis, the oversupply of the four utilities could increase to almost 12 million tonnes in the coming years.

The utilities currently import all the LNG they sell from entities such as Freeport LNG, with none produced domestically.

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