Osaka Gas Expects Minimal Impact from Freeport LNG Partial Shutdown

(Reuters) — Japan's Osaka Gas expects to see little impact on its balance of supply and demand for liquefied natural gas (LNG) from a partial shutdown of U.S. Freeport LNG's facilities, the president of the city gas provider said on Wednesday.

Last week Freeport said it shut the Train 2 liquefaction unit at its Texas plant, while Train 1 would be taken down soon in expectation of completing inspections and any subsequent repairs at both units by May.

"Our procurement volume from Freeport may fall slightly due to the issue, but we remain in a comfortable position in terms of LNG procurement, thanks to the mild winter conditions," President Masataka Fujiwara told a press conference.

"I don't see it as significantly affecting our supply and demand balance," he said, adding that he believed the mild winter had left most of Japan's other buyers with an excess of fuel.

Freeport LNG, the third biggest LNG export plant in the United States, supplies Osaka Gas with 2.32 million metric tons of the super-chilled fuel each year.

Earlier this month, Osaka Gas unveiled a new three-year business plan through March 2027, allocating a total investment of 560 billion yen ($3.7 billion) to growth segments such as shale gas development, renewable energy and synthetic methane.

Osaka Gas, a major LNG buyer, sees natural gas as a crucial energy source during the energy transition.

"Basically, we plan to renew our long-term LNG contracts, though term length would depend on discussions with suppliers," Fujiwara said, noting the importance of securing the fuel, particularly if divisions between the West and Russia limit Japan's access to new LNG coming from the Arctic region.

Fujiwara said he hoped Japan would emphasize the importance of stability in energy policy at the Japan-U.S. summit in April and urged against sudden changes like halting shale gas exports.

U.S. President Joe Biden in January paused new export permits for LNG projects to study the impact of further expansion, drawing criticism from LNG companies.

"We have a large investment in North America and we want our business to keep moving forward in a stable manner," Fujiwara said.

($1 = 151.6800 yen)

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