Qatar increases gas supplies to Japan

10 April 2011

Doha ready to provide additional cargoes in case of shortfalls

Qatar has increased its shipments of liquefied natural gas (LNG) to Japan in the wake of the tsunami and earthquake that disrupted nuclear power generation and will increase its deliveries if supply from other sources fall short, according to Qatar’s Energy Minister.

“I can confirm that Qatargas has already increased supplies of LNG to a number of our long-term buyers in Japan,” Mohammed al-Sada, Energy and Industry Minister and Qatargas chairman told Japan’s Nikkei newspaper.

“We are also sufficiently flexible in our supply to be able to offer long-term customers like Japan additional LNG cargoes in event of supply interruptions from other sources of gas,” he added.

Qatar is the world’s largest producer of LNG, hitting a combined production capacity of 77 million tonnes a year (t/y) by the end of 2010. Qatargas’s annual production stands at 42 million (t/y).

The meltdown at the Fukushima Daiichi nuclear power plant has increased Japan’s reliance on natural gas fired power generation. Last week, the head of Australian oil and gas exploration and production company Santos, David Knox, predicted that Japanese utilities will increase demand for LNG by around 10 per cent for the next three to four years.

He added that Fukushima would have a significant impact on the global LNG market if the meltdown leads to the cancellation of nuclear power plant projects.

Japan’s impact on the LNG market also depends on the government decision as to whether to add regional gas-fired capacity, or allow for the transfer of electricity, which would allow more power to be transferred from the 60Hz transmission grid to the 50Hz grid in north-east Japan.

“Good regional supply availability and competitive prices compared to crude oil or low-sulphur fuel oil will favour LNG as a substitute feedstock, although the extent of longer term demand growth will partially depend on whether the government moves ahead with plans to increase converter capacity between Japan’s transmission grids, or relies on new gas-fired capacity,” Tom Grieder, IHS Global Insight analyst, wrote in a research note.

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