Japan expands LNG flexibility via cooperation with South Korea, Italy

HIROSHIMA, Japan: Japan agreed on Sunday (Oct 6) to study cooperating with South Korea and Italy on procurement of liquefied natural gas (LNG) as the world's second-biggest LNG importer after China seeks greater flexibility while strengthening its energy security.

JERA, Japan's biggest utility company, and South Korea's Korea Gas Corp (KOGAS), also a major LNG buyer, are collaborating on opportunities for joint procurement, cargo swaps and other forms of cooperation, Japan's Ministry of Economy, Trade and Industry (METI) said in a statement on Sunday.

"The governments of both countries expect that this endeavour will serve as the starting point for a new LNG cooperation between Korean and Japanese companies," said the statement co-signed by the South Korean Ministry of Trade, Industry and Energy.

Separately, the state-backed Japan Organization for Metals and Energy Security (JOGMEC) signed a preliminary agreement with Italian energy company Eni to cooperate on LNG procurement, as Eni also seeks investors for its LNG projects.

"We already deal with Japanese buyers on a short-term basis and we would like to expand that collaboration also to a long-term basis," Cristian Signoretto, Eni's director for global gas and LNG portfolio, told reporters on the sidelines of an LNG conference in Hiroshima on Sunday.

Japanese buyers are increasingly looking for more flexible contracts with shorter durations that also allow for resales so the companies can divert cargo to other buyers when domestic demand declines. Japan is also boosting its own LNG trading in the region.

Tokyo Gas, Japan's biggest city gas provider, is already collaborating with partners for joint LNG procurement which strengthens its emergency response capabilities, Yumiko Yao, senior general manager for LNG, told the conference on Sunday.

Part of ensuring adequate supply, JERA is designated by the Japanese government to secure one cargo of LNG, about 70,000 metric tons, each month from December to February in preparation for the heating season for the country's strategic LNG buffer (SBL).

Japan is going to prepare cargo for the SBL for this heating season as well, Yuya Hasegawa, a division director at Japan's Ministry of Economy, Trade and Industry, told Reuters on the sidelines of the conference.

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