Interview with Yuji Kumai, The Japan Gas Association, International Relations Section

Ahead of the 2019 Summit, the CWC Group interviewed Yuji Kumai, The Japan Gas Association to get his thoughts on LNG pricing trends and the future of LNG bunkering in Japan.

CWC Group: What trends do you currently see for mid/long-term LNG pricing in Japan, and how is China’s growing demand impacting the Japanese market?

JGA: It is said that China will overtake Japan in the next couple of years and become the world’s largest importer of LNG. I heard that China imposes tariffs on LNG. It is very difficult to forecast the influence on Japan’s LNG import. Under such circumstances, distortion may occur in the short term in terms of quantitative and price aspects.

In addition, there are sanctions against Iran of the United States.

Although LNG’s dependence on the Middle East is not high, as the price of crude oil rises, it will also affect LNG prices, so uncertainty about LNG will continue for the time being due to the US-China trade war, Iran issue, etc. While the gas industry is based on long-term contracts, spot contracts are also increasing recently; each company is considering how much it will be affected in the future.

CWC: What does the future hold for LNG bunkering in Japan?

JGA: Regarding the regulation of ships’ exhaust emissions strengthened in 2020, Japan, as the largest importer of LNG, aiming at bunkering base and established a support system as a country. The Government of Japan budgeted 700 million yen in 2018 budget with the goal toward the introduction of “Ship to Ship Bunkering” in 2020.

Also in the private sector, movements toward building LNG bunkering ships has begun. Kawasaki Heavy Industries, Ltd. signed a contract of shipbuilding of a 3,500 m3 LNG Bunkering Ship with a joint venture of Central LNG Shipping Co. ltd., which is a joint venture company of Kawasaki Kisen Kaisha, Chubu Electric Power Company, Toyota Tsusho Corporation and NYK Line. It is scheduled to be handed over in 2020.

In addition, Kyushu Electric Power, Saibu Gas, Chugoku Electric Power Company, and NYK Line signed a memorandum of understanding on joint study for commercialization of LNG fuel supply for ships in Setouchi and Kyushu districts. The four companies will jointly study the commercialization of LNG fuel supply for ships in the Setouchi and Kyushu regions.

In this way, there are movements toward LNG bunkering in both the government and the private sector, but at this moment it is difficult to make a prospect of how much demand will actually occur.

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