Japan city gas growth faces hurdles despite reforms

Spanish Market: LPG, Natural gas
05/01/22

The liberalisation of Japan's city gas market has not been as successful as its electricity market reforms, writes Reina Maeda

Japan's city gas sector faces challenges in expanding further this year despite the market undergoing the final stage of its liberalisation in April 2022.

The city gas sector — piped natural gas sold to the residential, commercial and industrial sectors — was gradually deregulated over 1995-2017. The final phase of the reform will end the dominant pipeline operations of three gas suppliers — Tokyo Gas, Osaka Gas and Toho Gas — which must create new independent piped gas subsidiaries from 1 April 2022. But the liberalisation has not had the same success of the country's similar electricity market reforms of 2016. Around 4mn city gas accounts had switched to new retailers as of 31 March 2021, but this was only 17pc of total users, data from Japan's trade and industry ministry Meti show.

Japan has 26 registered city gas suppliers, including distributors, utilities, refiners and LNG importers. But investing in a new market entrant does not guarantee profits and may not be a feasible business, market participants say. It is hard to provide competitive prices to customers owing to high wholesale prices, they say. And many of the country's suppliers are increasingly looking to invest in decarbonisation projects, slowing the gas grid expansion, an industry expert says.

Gas grids cover only around 6pc of Japan's land area in mainly urban areas, Meti says. People living in rural areas use cylinder LPG or electricity. The share of city gas in Japan's energy mix is much smaller than electricity's, although the number of city gas users has been slowly increasing. Domestic city gas sales rose by 4.8pc on the year to 28.4bn m³ in January-September, Meti data show. The use of LPG as a city gas component, to raise the calorific value, rose by 18pc to 908,800t. But the expansion of the market and the resulting loss in LPG consumption in the residential sector outweighs any gain from additional use as a city gas blendstock.

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28/04/25

Canadians go to polls in general election

Calgary, 28 April (Argus) — Voting in Canada is underway today with the governing Liberal party looking to complete a comeback in polling against the Conservative party to clinch its fourth-straight term. There are 343 seats up for grabs in Canada's Parliament and polls throughout the five-week campaign indicate the Liberals have a reasonable chance to win a majority, which would allow them to implement policies without needing the support of other parties. Latest polling figures show the Liberals at 43pc, the Conservatives at 39pc, the New Democratic Party (NDP) at 8pc, the Bloq Quebecois at 6pc, and the Green Party at 2pc, according to poll aggregator Canada338 on Monday. The Liberals have held power since 2015, but only in a minority capacity since the 2019 election. The key issues for Canadians this election cycle are inflation, housing, cost of living and international relations, according to polls. Diversifying trade and growing energy production have been promoted by both Conservative and Liberal leaders — and prime minister hopefuls — looking to become less dependent on US customers and kickstart a lagging economy. Canada is the world's fourth-largest oil producer with over 5.7mn b/d of output, and the fifth-largest natural gas producer at 18 Bcf/d, according to the Canadian Association of Petroleum Producers (CAPP). The US is Canada's largest foreign customer of each, but verbal and economic attacks on Canada by US president Donald Trump have prompted politicians and Canadians at large to reexamine their trade strategies. Conservative leader Pierre Poilievre says Liberal policies over the past decade have stifled the country's productivity and allowed it to become the weakest performer in the G7. Liberal policy needs to be undone so Canada can "unleash" its oil and gas sector to better protect its sovereignty , says Poilievre. Liberal leader Mark Carney's campaign has centered heavily on Trump, emphasizing the threat comes from abroad, not within. Carney wants to make Canada an "energy superpower" but maintains current legislation is the way to do it, despite calls to the contrary by oil and gas executives . A fresh face for the Liberals and a foe to rally against in Trump has lifted the fortunes of the party, which some critics speculated only months ago could lose most of its seats. As recent as January, the Liberals were facing a 26-point deficit in polls, but the party mounted a comeback at the expense of both the Conservatives and the left-leaning NDP. The Conservatives would likely have to overtake the Liberals by several percentage points to win enough seats to form a government, based on the past two elections in 2019 and 2021. More Canadians voted for Conservatives than any other party in those races, but the Liberals came away with the most seats, owing to their success in winning tight races. The last polls close on Canada's west coast at 10pm ET with preliminary results expected shortly after. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Oil services spell out initial cost of Trump’s tariffs

28/04/25

Oil services spell out initial cost of Trump’s tariffs

New York, 28 April (Argus) — The world's top oil field service firms are starting to count the cost of US president Donald Trump's unprecedented trade wars, amid a challenging outlook caused by tariff-related volatility that has sent oil prices lower and sparked fears of a recession. Halliburton forecasts a 2-3¢/share hit to second-quarter results, with its completion and production unit — which includes the hydraulic fracturing (fracking) business — accounting for 60pc of the expected fallout, and drilling and evaluation making up the rest. Baker Hughes says full-year profit could be reduced by $100mn-200mn, assuming that the tariff levels in effect under Trump's 90-day pause remain in place for the rest of the year. While SLB, the world's biggest oil field contractor, says it is to early to fully assess the potential impact of tariffs, the company is taking proactive steps to shore up its supply chain and manufacturing network, as well as pursuing exemptions and engaging with customers to recover related cost increases. Crude prices slumped to a four-year low earlier this month after Trump's tariffs threw global markets into a tailspin. The oil field service industry argues that it is better prepared for a downturn this time around, given a focus on capital discipline and returns in recent years. Yet the double blow of tariffs and an accelerated return of Opec+ barrels to the market could cause further headaches — even as firms move to mitigate the impact. "We need a bit more clarity and stability in the structure of tariffs so that we can really understand what levers we can pull and then what the overall outcome is going to be," Halliburton's chief financial officer, Eric Carre, says. "There's just a lot of moving parts right now." Global upstream spending will be "down by high-single digits" this year, Baker Hughes says. The company forecasts a low-double digit decline in North America spending by its clients, and a mid-to-high single-digit drop internationally. "A sustained move lower in oil prices or worsening tariffs would introduce further downside risk to this outlook," chief executive Lorenzo Simonelli argues. "The prospects of an oversupplied oil market, rising tariffs, uncertainty in Mexico and activity weakness in Saudi Arabia are collectively constraining international upstream spending levels." While Baker Hughes' "strong weighting" to international markets and a diversified and local supply chain provide a cushion, the company is seeking to limit the tariff impact for its industrial and energy technology division by exploring domestic procurement alternatives and improving its global manufacturing footprint. The Wright stuff Liberty Energy , whose former chief executive Chris Wright was picked by Trump to serve as his energy secretary, expects modest tariff-related inflationary impacts on engines and other electric components, some of which are being offset by lower prices or volume discounts. "All said, we don't anticipate a significant direct impact from tariffs at the moment," chief financial officer Michael Stock says. Shale producers are also starting to figure out how they may be affected, with Diamondback Energy reviewing its operating plan for the rest of the year. "Should low commodity prices persist or worsen, Diamondback has the flexibility to reduce activity to maximise free cash flow generation," the company says. And Devon Energy aims to boost annual pre-tax free cash flow by $1bn, partly by doubling down on efficiency savings — a strategy that has gained momentum from the recent tariff turmoil. "Given the challenging market and shifting competitive landscape, this is the right moment to focus internally and improve our profitability," chief executive Clay Gaspar says. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump works to blunt renewables growth

28/04/25

Trump works to blunt renewables growth

Washington, 28 April (Argus) — US president Donald Trump has started to impede development of renewable energy projects he sees as boondoggles, but he is facing challenges to his attempts to halt government funding and tax credits for the sector. Trump has attacked wind turbines and solar projects as part of a "Green New Scam" that should not be built, based on his preference for the fossil fuel-fired and nuclear power plants he says are more reliable and affordable. Trump selected a cabinet of like-minded individuals who oppose renewables and see little urgency to address climate change. He was elected to end the "nonsense" of building renewable resources that are heavily subsidised, make the grid less reliable and raise costs, energy secretary Chris Wright said in an interview on Earth Day. Interior secretary Doug Burgum on 16 April ordered Norwegian state-controlled Equinor to "immediately halt" construction of the 810MW Empire Wind project off New York. Trump had already ordered a freeze on future offshore wind leases , and suspending Empire Wind's permits is likely to spook investors even outside the renewables sphere. To reverse course on a fully permitted project is "bad policy" that "sends a chilling signal to all energy investment", American Clean Power Association chief executive Jason Grumet says. The US last week separately said it would impose anti-dumping duties on solar components imported from four southeast Asian countries that will range from 15pc to 3,400pc. Those duties — in effect from June to support US solar manufacturers — will be in addition to a 10pc across-the-board tariff the US imposed this month on most imports. Solar industry groups have said that steep import duties will make new installations unaffordable, stunting the industry's ability to grow. Trump has had less success in his push to axe support for renewables approved under Joe Biden. On 15 April, a federal judge ordered the administration to unfreeze billions of dollars for clean energy projects provided by the Inflation Reduction Act (IRA) and 2021 infrastructure law. The administration lacks "unfettered power to hamstring in perpetuity two statutes", judge Mary McElroy wrote. In a separate ruling on 15 April, judge Tanya Chutkan prohibited the administration from suspending $14bn in grants distributed to nonprofits under the IRA for a greenhouse gas reduction programme. The administration is appealing both rulings. Targeting the windfall Trump could further undermine the growth of renewables by convincing Republicans in Congress to use an upcoming filibuster-proof budget package to repeal or narrow the IRA's tax credits for wind, solar and other clean energy projects. Critics of that law see the potential for $1 trillion in savings by repealing its tax credits, which could offset the costs of more than $5 trillion in planned tax cuts. But there appear to be enough votes in each chamber of Congress to spare at least some of the IRA's energy tax credits. In the Senate, where Republicans can only afford to lose three votes, Alaska's Lisa Murkowski and three other Republicans signed a joint letter this month saying "wholesale repeal" of the tax credits would fuel uncertainty and undermine job creation. In the House of Representatives, where Republicans have a similarly slim majority, 21 Republicans voiced concerns earlier this year about repealing all of the tax credits. Renewables are on track to overtake natural gas as the largest source of US electricity by 2030 — assuming the tax credits and climate rules enacted under Biden remain intact — the EIA stated this month in its Annual Energy Outlook . The amount of power from renewables under the EIA's existing policy baseline by 2035 will increase by 135pc to 2.8bn MWh, while gas-fired power will decline by 14pc to 1.6bn MWh over the same time period. By Chris Knight Baseline US net power generation Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

SLB taking steps to offset tariffs: Update

25/04/25

SLB taking steps to offset tariffs: Update

Adds details from call. New York, 25 April (Argus) — Oilfield services contractor SLB said it is taking proactive steps to offset the impact of US tariffs by reviewing its supply chain and manufacturing network, pursuing exemptions and talking to customers to recover related cost increases. "We have made progress on all these fronts in the last two weeks, and we are stepping up those actions across the organization as we speak," chief financial officer Stephane Biguet told analysts after the company reported first quarter results today. SLB is partly protected from the overall tariff fallout given 80pc of total revenue comes from international markets, as well as its in-country manufacturing and local sourcing efforts. But other areas are exposed to increasing tariffs, such as imports of raw materials into the US, as well as exports from the US subject to retaliatory action. Under the current tariff framework, most of the likely effects come from trade activity between the US and China. "As the second quarter progresses and ongoing trade negotiations continue, we will hopefully gain better visibility of where tariffs may settle and the extent to which we will be able to mitigate their effects on our business," Biguet said. In the current climate, SLB says customers are likely to take a more cautious approach to near-term activity. Given industry headwinds from volatile oil prices and demand risks, SLB expects global upstream investment to decline this year from 2024, with customer spending in the Middle East and Asia holding up better than elsewhere. SLB reported a "subdued" start to the year as revenue fell 3pc in the first quarter from the same three months of 2024. The company noted higher activity in parts of the Middle East, North Africa, Argentina and offshore US, along with strong growth in its data center and digital businesses in North America. However, those gains were more than offset by a larger-than-expected slowdown in Mexico, a slow start in Saudi Arabia and offshore Africa, and a steep decline in Russia. Even so, SLB remains committed to returning a minimum of $4bn to shareholders through dividends and share buybacks this year. "The industry may experience a potential shift of priorities driven by changes in the global economy, fluctuating commodity prices and evolving tariffs — all of which could impact upstream oil and gas investment and, in turn, affect demand for our products and services, said chief executive officer Olivier Le Peuch. "In this uncertain environment, we remain committed to protecting our margins, generating strong cash flow and delivering consistent value." First quarter profit of $797mn was down from $1.07bn in the same three months of 2024. Revenue of $8.5bn compared with $8.7bn last year. SLB is the last of the top oilfield services firms to post first-quarter results. Halliburton and Baker Hughes reported earlier this week. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Canada’s Liberals ahead on election homestretch

25/04/25

Canada’s Liberals ahead on election homestretch

Both parties push the need for new investment to tap non-US energy markets, but project permitting policy is a key differentiator, writes Brett Holmes Calgary, 25 April (Argus) — Canada's Liberal party is positioning itself to receive a fourth straight mandate on 28 April, but it must first fend off a late push by the Conservatives in an election campaign that has been closely watched by the energy sector. The Liberals have benefited from the selection of a new leader in Mark Carney last month, combined with a considerable foe to rally against — US president Donald Trump and his verbal and economic attacks on Canada. While campaigning, Carney has tried to keep the focus on Trump's annexation and economic threats, but momentum has seemingly stalled. The Liberals led the Conservatives by a 42:38 margin on 24 April, but this is three points less than 10 days earlier, according to poll aggregator 338Canada. The tight race has already motivated a record 7.3mn electors to cast their vote at advance polls, and the energy industry has kept a close eye on promises made by both Carney and his challenger, Conservative leader Pierre Poilievre. Both agree that pivoting away from a hostile US is critical, and that new trade corridors to Canada's coasts are key to reaching more reliable partners. But executives from major Canadian energy companies point out that there is likely to be lower-hanging fruit that can attract investment in a country where productivity has been lagging its peers. Industry leaders have pleaded for government to "reset its policies", which Carney seems less inclined to do than Poilievre. Carney sees a future where foreign countries will demand less carbon-intensive oil and gas, meaning a proposed cap on the industry's emissions would be implemented as planned, and support for carbon capture projects would continue under a Liberal government. An overhaul of Canada's Impact Assessment Act is unnecessary, Carney says, suggesting the legislation sets major project proponents up for success because its rigour helps to avoid court battles. But the Canadian Association of Petroleum Producers (Capp) points to that legislation as the top reason why C$280bn ($200bn) of oil and gas projects were cancelled over the past decade. Repealing the law was among the "demands" Alberta premier Danielle Smith made to Carney in March, but the latter seems content to hang on to many of former prime minister Justin Trudeau's energy policies. Carney was born in Alberta , but familiarity has yet to translate into co-operative relations between federal and provincial government. Yet his desire to build new conventional energy projects marks a key departure from Trudeau. Build, baby build "I'm interested in getting energy infrastructure built," Carney said during the 18 April leaders' debate. "That means pipelines, that means carbon capture and storage, that means electricity grids." And the Liberals are prepared to use federal emergency powers, but consent from provinces would still be required. The Conservatives pitch an accelerated six-month regulatory review period to "unleash" Canada's energy so as to stand up to the likes of Trump from a position of strength. The Conservatives tout shovel-ready projects that would kick-start construction as soon as they are approved by a new government. Capp estimates that Canada has C$50bn of energy investment waiting approval. "For three Liberal terms, Canada has had the worst GDP per capita in the G7," Poilievre says. The National Bank of Canada says this primarily reflects Canada's lacklustre investment and productivity over the past decade. Canadian think-tank CD Howe Institute says this cycle can be corrected by a full overhaul of government policy, including the acceleration of permitting for major private-sector projects. Eliminating current and proposed Liberal policy would be among Poilievre's first moves to resurrect investment. Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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