Japanese gas utilities expect to see significant LNG price impact on their oil-linked long-term contractual supplies in the event of a Strait of Hormuz closure, Japan Gas Association Chairman Takashi Uchida said April 24.
Não está cadastrado?
Receba e-mails diários com alertas, notas ao assinante; personalize sua experiência.
Cadastre-se agoraA closure of the Strait of Hormuz would not only have oil price impact from Saudi Arabian crude oil supply getting affected but also have subsequent impact on the oil-linked long-term LNG supply price, Uchida told a press conference in Tokyo.
"We expect [the LNG] price could be impacted significantly from crude oil getting affected [from a potential Strait of Hormuz closure]," said Uchida, who took the helm of the JGA on April 1, despite a limited LNG supply volume impact expected for Japan.
Uchida's comments came after Iran, in its recent escalation with Israel, threatened to shut down the Strait of Hormuz connecting the Persian Gulf to the Arabian Sea. Some 20 million b/d of seaborne crude, condensate and refined fuels transit the Strait of Hormuz, along with almost 11 Bcf/d of LNG.
"In the event of a closure of the Strait of Hormuz, we believe Japan as a whole as well as the city gas industry would not have major [LNG supply volume] impact," said Uchida, who is also chairman of Tokyo Gas, adding that there are "almost no [LNG] imports for city gas use" from Qatar.
Japan imported a total of 3.776 million mt LNG from Qatar and the UAE, accounting for 5.7% of its total LNG imports in 2023, according to Ministry of Finance data.
New supplies
Commenting on reports of the UAE's Ruwais LNG project development, Uchida said any progress in LNG investments including in the UAE is a positive move.
"For Japan, however, LNG [supplies] from Canada and Mexico for example in the Pacific are expected to flow in," Uchida said. "We would be most grateful to see a supply capacity increase there."
LNG Canada is now scheduled to ship the first cargo in mid-2025, said a spokesperson for Mitsubishi, which has a 15% stake in the project through its subsidiary and sold 600,000 mt/year of LNG supply from the Canadian project to Tokyo Gas.
LNG supply from Canada reaches Japan in a week without needing to go through the Panama Canal and is free from geopolitical risk.
With prospects of new LNG supply from Mozambique and Indonesia, "should the UAE really proceed to start production and become one of many [supply] options, we would welcome that," Uchida said.
Depending heavily on a particular LNG supplier would be "most risky" and "it is important to keep options," Uchida added.