The president and CEO of Qatar Petroleum, and chairman of Qatargas, Saad Sherida Al-Kaabi concluded this week a series of meetings in Japan with senior executives of major Japanese energy companies. The visit was "designed to follow up on all issues that relate to the existing cooperation and business relationships and ways to enhance them" the company said.
Al-Kaabi had scheduled appointments with Chubu Electric, Jera, Mitsui, Chiyoda Corporation, Idemitsu, Cosmo Oil Company, LNG Japan, Mitsui & Co. and Marubeni Corporation, Qatar Petroleum said in a statement.
He was accompanied by senior Qatar Petroleum and Qatargas officials.
Moreover, the business visit included meetings with Japanese financial institutions such as Bank of Tokyo – Mitsubishi UFJ and Japan Bank for International Cooperation; utility companies such as Tokyo Electric (TEPCO), Kansai Electric, and Tohoku Electric; and other major companies and shipping lines such as NYK Line, Lino, MOL, K Line, and Itochu.
“Collaboration in the field of natural gas has a special significance in the matrix of relations with Japan, which was Qatar’s founding LNG customer” the company said.
Qatar’s first liquefied natural gas shipment, from Qatargas, arrived at the shores of Japan in January 1997 under the first ever binding LNG supply contract signed between Chubu Electric and seven other Japanese buyers and Qatargas.
“1997 was the beginning of our historic journey in Japan with Chubu Electric and the seven founding Japanese buyers" Al-Kaabi said, speaking at the annual reception hosted by Qatargas for its Japanese partners and customers.
"I am proud to announce that we have successfully delivered more than 2,500 cargoes to our esteemed Japanese LNG buyers" he said, adding that "this achievement could not have been possible without the confidence of our customers and the cooperation of all our partners in Japan.”
Japan facing biggest LNG, gas market shake-up since 1970
Japan's dependence on LNG supplies heightened following the Fukushima nuclear plant disaster, which saw the country's players ramping up its LNG imports both by maximising existing long-term contracts, and by increasingly being active in the spot market.
However, with long-term oil linked LNG import contracts historically proving more expensive than spot prices, Japanese importers have progressively been trying to renegotiate their long-term commitments towards more favourable terms. This has culminated in a recently announced plan to turn Japan into an LNG gas hub, which could represent the biggest change in the market in decades, a June report by the Oxford Institute of Energy Studies highlighted.
Pressures for a shift towards spot pricing have further increased recently, as the country's generation mix is likely to remain heavily reliant on gas in the coming years, despite the progressive coming back of nuclear energy, the report noted.
Japan's “Energy Strategy unveiled in mid-2015 foresaw 20-22 percent of nuclear in the power mix by 2030” however “this appears very ambitious to most observers, with an increased use of renewables, coal and LNG a more likely outcome” the reports pointed out.
“But in the absence of CCS, greater use of coal rather than LNG would present challenges to emission targets and, despite a drop in LNG imports in 2015, for these reasons it appears likely that LNG will continue to represent a key component of Japan’s future energy mix” it added.
Therefore, “given the impact of high oil and LNG prices on the country’s trade balance over 2010-14 and on the financial health of gas and power companies, LNG will be more acceptable if it is affordable which, in Asian buyers’ eyes, means at prices delinked from oil” it underlined.
On the back of that objective, Japan's energy minister unveiled at a recent G7 Energy Ministerial meeting that the country is now targeting the development of a “flexible and liquid LNG market and the creation of an LNG trading hub” in Japan. This new strategy “heralds the biggest shake-up of the Japanese gas and LNG market since its creation in the 1970s” the report stresses.
“Flexibility will be achieved by the expansion of spot trade and pricing which `properly reflects the actual supply and demand of LNG’” the report explains, adding that in the aim of the Japanese government, “this will eventually achieve the goal of creating `an internationally recognised hub by the early 2020s’.”