Japanese utilities boost LNG reserves, METI sees no calls for emergency supply yet

TOKYO, March 4 : Major Japanese utilities increased their liquefied natural gas stockpiles by 10 per cent to 2.19 million metric tons last week, the Ministry of Economy, Trade and Industry (METI) said on Wednesday, adding that there were no calls so far for emergency supplies.

The LNG stockpiles of utilities in Japan, the world’s second-biggest LNG buyer, are equal to around 12 days of domestic use for the week that ended on March 1. They were up from 2 million tons held during the week that ended on February 22, METI data showed.

While Japan’s LNG imports from the Middle East – specifically Qatar, Oman and the United Arab Emirates – make up 11 per cent of its total, only about 6 per cent is passing through the Strait of Hormuz, which has been closed due to the attack on Iran by the U.S. and Israel.

Global oil and gas prices have been pushed higher as the war has halted energy exports from the Middle East, with Tehran attacking ships and energy facilities, closing navigation in the Gulf and forcing production stoppages.

JERA, Japan’s biggest LNG buyer, has been instructed by METI to ensure at least one LNG cargo – about 70,000 tons – is secured each month to mitigate supply risks under the Strategic Buffer LNG (SBL) scheme.

“We have not received any requests for support from electric power or gas companies for SBL usage,” a METI official said. Based on METI communications with companies, it does not expect an immediate LNG shortage risk at the moment, the official added.

JERA declined to comment on the SBL but said none of its LNG vessels have so far been affected by the war in the Gulf region and the LNG production halt by Qatar.

Kansai Electric Power sources about 13 per cent of its LNG from Qatar, it said by email, and if the current situation is to continue for a prolonged period, there is a possibility that the company’s LNG supplies from Qatar could be affected.

Overall, Japan holds over 4 million tons of LNG in storage, according to Kpler analyst Go Katayama, and given that it gets only 0.1 million tons per week via the Strait of Hormuz, Japan is “highly insulated from a narrow Strait of Hormuz disruption.”

“In a pure Hormuz-only outage scenario and under stable demand conditions, Japan’s inventories would provide roughly 44 weeks of cover, or close to a year,” Katayama said, adding that overall, Japan’s LNG stocks allow for some three weeks of cover.