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Japan mulls impact of potential Russian LNG sanctions

  • : Natural gas
  • 22/02/23

Japan's LNG buyers are awaiting updates on whether exports of the fuel from Russia will be included in newly imposed sanctions on the country, suggesting that there could be long-term repercussions on Japan's LNG supply-demand situation even if any short-term impact resulting from such curbs will likely be minimal.

A recent rise in LNG inventories and expectations of milder weather in Japan in the coming weeks could limit the short-term impact of any potential halt in LNG supplies from Russia, industry participants said. But sustained curbs could create additional spot requirements from Japan in the following months and hurt future bilateral collaboration between the two countries, especially with several of Japan's term contracts having expired or due to expire, they added.

Japan's prime minister Fumio Kishida said on 23 February that the country will join the US and EU in imposing sanctions on Russia over the situation in Ukraine, including banning trades with the self-proclaimed Donetsk People's Republic (DNR) and Luhansk People's Republic (LNR) in eastern Ukraine, and suspending the issuance of new sovereign debt by the Russian government in Japan.

He did not mention if sanctions are being imposed on the energy sector, including LNG, but said that the "situation" will not have a huge impact on the country's energy supply. He also said that Japan will "promptly take further measures" if the situation worsens, without mentioning if LNG will be implicated.

"LNG is also in stock for a few weeks at electric power companies and gas companies," Kishida said in his only mention of LNG, as he spoke of the country's 240 days of crude oil reserves. "For this reason, we recognise that this situation will not immediately cause a major hindrance to the stable supply of energy," he continued.

Expectations on whether Japan's sanctions on Russia will be extended to LNG are mixed. "I don't think they will touch the energy sector… it will be a lose-lose situation for both countries," a Japanese buyer said.

But some expect the curbs to cover all sectors, including LNG. "Once they impose a sanction, it means they immediately want to stop trading with that country," a trading analyst said.

Japan imported a total of 6.57mn t of LNG from Russia in 2021, up from 6.14mn t a year earlier. Its Russian imports in 2021 accounted for around 8.8pc of its total LNG imports of 74.3mn t in the year.

It received 645,596t of LNG from Russia in December 2021, accounting for 9.2pc of its total LNG imports in the month. Russia was the country's fourth-largest LNG exporter in December, after Australia, Malaysia and Qatar.

"I am hoping LNG will remain outside of [the sanctions] if they don't want the population to pay," a trader said.

"End users [and the] general population will bear the brunt of energy inflation," he said, adding that high LNG prices have already trickled down to and impacted downstream customers.

Asian spot LNG prices have traded at high levels since September last year, largely fuelled by gains in European gas hub prices. The ANEA price, the Argus assessment for spot LNG deliveries to northeast Asia including Japan, for the front half-month averaged $30.504/mn Btu from 1 September last year to 22 February this year and hit a record high of $44.980/mn Btu on 22 December 2021. It was last assessed at $24.535/mn Btu on 22 February, nearly four times the $6.780/mn Btu assessed exactly a year earlier.

Japan's LNG inventories rise

Japan's LNG inventory levels have picked up slightly in recent weeks, after a fall in coal- and oil-fired generation capacity in end-January increased the call on gas for power generation and led to a dip in stock levels.

Japan's main power utilities held 1.82mn t of LNG as of 20 February, up by 2.2pc from 1.78mn t a week earlier and higher than 1.67mn t on 30 January, according to a weekly survey by the trade and industry ministry. But they were lower than 2.3mn t at the end of February last year.

LNG market participants generally echoed Kishida's views of ample inventories, but cautioned that any cold snap that occurs in the coming weeks would draw down inventories rapidly.

"I think Japanese buyers will be able to cope in the next 2-3 weeks [in the event of LNG sanctions] because inventories are okay," a Japanese trader said. But an unexpected cold snap could draw down inventories significantly. This is also "bearing in mind that Japan's storage capacity is not as huge as in China [or] Europe," a trader at a European firm said.

The Japan Meteorological Agency (JMA) is so far predicting generally warmer-than-usual weather in the country in the coming weeks. It forecast on 17 February a 50pc or high probability of above-normal temperatures throughout Japan from 26 February-4 March, and a 30-50pc likelihood of that from 5-18 March.

But Japanese LNG buyers may have to procure replacement cargoes from the spot market for deliveries further out if their long-term supplies from Russia are disrupted.

"Maybe there won't be so much impact on the prompt market since buyers already bought some spot cargoes, but it may affect their supply-demand balance for summer if they don't get term cargoes from Russia," a Japanese buyer said. The northern hemisphere summer season typically lasts from June-September.

Several Japanese buyers — including power utilities Kansai Electric, Chugoku Electric and Kyushu Electric — have bought March and April cargoes from the spot market in recent weeks, with the supplies sourced from various liquefaction plants, including those in Oman and Australia.

At least eight Japanese buyers have term offtakes from the 9.6mn t/yr Sakhalin LNG project in far east Russia. Major state-owned importer Jera has a contract to receive 1.5mn t/yr of LNG from the facility across 2009-29 on a fob basis, and a separate agreement to receive 500,000 t/yr from 2011-26 on a des basis.

Other Japanese firms including Hiroshima Gas, Osaka Gas, Saibu Gas, Toho Gas, Tokyo Gas, Kyushu Electric and Tohoku Electric have separate contracts to receive a total of at least 3mn t/yr of LNG from the project.

Future LNG collaboration may be in jeopardy

Sustained sanctions on LNG, if they are imposed, could hurt chances of further collaboration between the two countries, particularly at a time when several of Japan's contracts with other LNG suppliers have expired or are expiring and Russian liquefaction capacity is expanding, industry participants said.

The first 6.6mn t/yr train at the planned 19.8mn t/yr Novatek-led Arctic LNG 2 facility is expected to begin operations in 2023, with the second and third equally-sized trains expected to commence in 2024 and 2025, respectively. Novatek has so far signed long-term agreements with Chinese firms that include ENN, Zhejiang Energy Gas and Shenergy to supply LNG from Arctic 2, in addition to trading firms Vitol and Glencore, as well as Spain's Repsol, and may potentially be looking to ink more term deals, industry participants said.

State-owned importer Jera said last November that it would not renew its long-term LNG contracts totalling 5.5mn t/yr from Qatar that were due to expire the following month. Another Japanese buyer has an existing contract with Malaysian state-owned Petronas to buy LNG from the 30mn t/yr Bintulu LNG plant that will expire in March this year.

By Joey Chua


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25/01/21

Trump to declare energy 'emergency': Update 2

Trump to declare energy 'emergency': Update 2

Updates with details throughout Washington, 20 January (Argus) — President Donald Trump today signed an executive order declaring a "national energy emergency" and said he plans to impose 25pc tariffs on imports from Canada and Mexico on 1 February. Returning to the White House for a second term, Trump signed a series of executive orders on energy and trade that he said will restore "common sense" to US policy. His orders aim to expedite permitting of energy infrastructure, tackle inflation, roll back climate programs put in place under former president Joe Biden and pursue a "drill, baby, drill" energy policy. In declaring a national energy emergency, Trump's order contends the Biden administration left a "precariously inadequate and intermittent energy supply, and an increasingly unreliable grid" that required swift action. Trump also froze all federal regulations, placed a temporary hold on hiring non-military federal workers, rescinded 78 Biden executive actions and memoranda and began rolling back Biden's climate legacy. "I'm immediately withdrawing from the unfair, one-sided Paris climate accord rip-off," Trump said at a rally held after his second inaugural ceremony. Trump's declaration of an "energy emergency" could bolster the legal rationale for some of energy policies and plans to expedite permitting. Trump also said he plans to end the "Green New Deal" — a reference to climate programs enacted under Biden — and revoke an "electric vehicle mandate" he said is threatening the US auto manufacturing sector. Trump also vowed to begin an "overhaul" of the US trade system to protect domestic workers and reiterated his support for tariffs, which he sees as a way to raise government revenue and support domestic manufacturing. "Tariffs are going to make us rich as hell," Trump said. They are "going to bring our country's businesses back that left us". While Trump is reiterating his threat to impose tariffs on Canada and Mexico, oil industry officials have warned such a move could disrupt the nearly 4mn b/d of crude the US imports from Canada. Trump stopped short of promised to erect tariffs on all US imports, saying: "We're not ready for that." On foreign policy, Trump said the US would "reclaim its rightful place" as the most powerful country in the world and reiterated plans to rename the Gulf of Mexico as the Gulf of America. Trump also promised still-unspecified actions to take control of the US-built Panama Canal in response to what he says has been unfair treatment of US ships, a claim that Panamanian president Jose Raul Mulino has rejected. "We gave it to Panama, and we're taking it back," Trump said during his second inaugural address. Trump signed an order to ease drilling restrictions in the Arctic National Wildlife Refuge and the National Petroleum Reserve in Alaska, while also prioritizing the development of the proposed 20mn t/yr Alaska LNG export terminal. Trump also said he wants to refill the US Strategic Petroleum Reserve (SPR), which is at 55pc of its capacity with 394mn bl of crude in storage, "right to the top". Refilling the SPR would require the US Congress to appropriate $32bn at current prices, to offset the costs of canceling 100mn bl of upcoming mandatory crude sales and buying about 300mn bl of crude. Trump signed an order to rescind a series of climate-related orders Biden had issued, measures the new administration says places "undue burdens" on energy production. And he imposed a temporary moratorium on leasing acreage in federal waters for wind projects. "We're not going to do the wind thing," Trump said. That drew an outcry from offshore wind advocacy group Turn Forward, whose executive director Hillary Bright said an emergency should require unleashing "all necessary sources of American energy — including offshore wind". During his campaign, Trump promised to cut the price of energy by 50pc within 12 months of taking office. But with regular grade gasoline averaging close to $3/USG and Henry Hub natural gas prices less $4/mmBtu this month, such a dramatic cut in prices would be difficult to achieve without causing major disruptions to industry. Environmentalists and Democratic-led states are also preparing to file lawsuits challenging Trump's deregulatory actions, a strategy they used during his first term with mixed success. Trump was sworn in in a relatively small ceremony inside the US Capitol, after calling off a more traditional, outdoor inauguration because of temperatures that were hovering around 23° F. Among those in attendance was Telsa chief executive Elon Musk, who spent more than $250mn to help elect Trump and is chairing a cost-cutting advisory panel. After being sworn in, Trump formally nominated his cabinet members, leaving it up to the Republican-controlled US Senate to hold confirmation votes. Trump also named Republicans to lead 15 independent agencies. Trump named Mark Christie as chairman of the US Federal Energy Regulatory Commission; Mark Uyeda as acting chair of the US Securities and Exchange Commission; and Patrick Fuchs as chair of the US Surface Transportation Board. Caroline Pham became acting chairman of the US Commodity Futures Trading Commission through a vote of its members. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump to declare energy 'emergency': Update


25/01/21
25/01/21

Trump to declare energy 'emergency': Update

Updates with changes throughout Washington, 20 January (Argus) — President Donald Trump pledged today to declare a "national energy emergency" as one of the first acts of his second term in office and has signed a series of executive orders designed to bring down energy costs, including pulling the US out of the Paris climate agreement. The executive orders on energy, trade and other issues will restore "common sense" in US policy, Trump said during his second inaugural address, moments after being sworn in at the US Capitol. The executive orders and emergency declaration are intended to expedite permitting of energy infrastructure, tackle inflation, roll back climate programs put in place under former president Joe Biden and pursue what Trump says is a policy to "drill, baby, drill". Trump signed his first set of executive orders during a rally tonight with supporters and plans to sign more orders later tonight at the White House. The first executive orders will implement an "immediate regulation freeze", put a temporary hold on hiring workers and rescind 78 of Biden's executive actions and memoranda. Trump also signed a directive to federal agencies to take steps to reduce the cost-of-living, along with a separate order that will withdraw the US from the Paris climate accord for a second time. "I'm immediately withdrawing from the unfair, one-sided Paris climate accord rip-off," Trump said at a rally later in the day. "The United States will not sabotage their own industries while China pollutes with impunity." Trump's declaration of an "energy emergency" could bolster the legal rationale for some of energy policies and plans to expedite permitting. Trump also said he plans to end the "Green New Deal" — a reference to climate programs enacted under Biden — and revoke an "electric vehicle mandate" he said is threatening the US auto manufacturing sector. Trump also vowed to begin an "overhaul" of the US trade system to protect domestic workers and reiterated his support for tariffs, which he sees as a way to raise government revenue and support domestic manufacturing. "Tariffs are going to make us rich as hell," Trump said. They are "going to bring our country's businesses back that left us." But it remains unclear if Trump will move ahead with his threatened 25pc tariff against Canada that oil industry officials have said could disrupt the nearly 4mn b/d of crude the US imports from Canada. On foreign policy, Trump said the US would "reclaim its rightful place" as the most powerful country in the world and reiterated plans to rename the Gulf of Mexico as the Gulf of America. Trump also promised still-unspecified actions to take control of the US-built Panama Canal in response to what he says has been unfair treatment of US ships, a threat that Panamanian president Jose Raul Mulino has rejected . "We gave it to Panama, and we're taking it back," Trump said. Trump is expected to take action soon to restart licensing of US LNG export terminals and support drilling in the Arctic National Wildlife Refuge. Trump said he wants the US to take advantage of its vast oil and gas reserves, which he said would reduce energy prices and increase energy exports. Trump also said he wants to refill the US Strategic Petroleum Reserve (SPR), which is at 55pc of its capacity with 394mn bl of crude in storage, "right to the top". Refilling the SPR would require the US Congress to appropriate $32bn at current prices, to offset the costs of canceling 100mn bl of upcoming mandatory crude sales and buying about 300mn bl of crude. Trump has yet to specify which parts of Biden's climate legislation he will work to overturn, which also would require congressional action. But the White House said the administration would consider rescinding all federal rules that put "undue burdens" on energy producers and stop leasing federal land to wind farms. "We're not going to do the wind thing," Trump said. That drew an outcry from offshore wind advocacy group Turn Forward, whose executive director Hillary Bright said an emergency should require unleashing "all necessary sources of American energy — including offshore wind." During his campaign, Trump promised to cut the price of energy by 50pc within 12 months of taking office. But with regular grade gasoline averaging close to $3/USG and Henry Hub natural gas prices less $4/mmBtu this month, such a dramatic cut in prices would be difficult to achieve without causing major disruptions to industry. Environmentalists and Democratic-led states are also preparing to file lawsuits challenging Trump's deregulatory actions, a strategy they used during his first term with mixed success. Trump was sworn in in a relatively small ceremony inside the US Capitol, after calling off a more traditional, outdoor inauguration because of temperatures that were hovering around 23° F. Among those in attendance was Telsa chief executive Elon Musk, who spent more than $250mn to help elect Trump and is chairing a cost-cutting advisory panel. After being sworn in, Trump formally nominated his cabinet members, leaving it up to the Republican-controlled US Senate to hold confirmation votes. Trump also named Republicans to lead 15 independent agencies. Trump named Mark Christie as chairman of the US Federal Energy Regulatory Commission, Mark Uyeda as acting chair of the US Securities and Exchange Commission,and Patrick Fuchs as chair of the US Surface Transportation Board. Caroline Pham became acting chairman of the US Commodity Futures Trading Commission through a vote of its members. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Trump sworn in with vow to 'drill, baby, drill'


25/01/20
25/01/20

Trump sworn in with vow to 'drill, baby, drill'

Washington, 20 January (Argus) — President Donald Trump, within minutes of being sworn in for a second term in office, pledged today to declare a "national energy emergency" and sign executive orders to expand drilling, block electric vehicle regulations and end the climate policies of his predecessor. In his second inaugural address delivered inside the rotunda of the US Capitol, Trump vowed to put "America first" and make the US "greater, stronger and far more exceptional than ever before". Trump said he will sign a raft of executive orders to restore "common sense" in US policy, including a directive for his administration to "defeat" inflation by increasing drilling and rolling back climate-related policies. "The inflation crisis was caused by massive overspending and escalating energy prices, and that is why today I will also declare a national energy emergency," Trump said. "We will drill, baby, drill." It remains unclear if Trump will take action soon on his plan to pursue across-the-board import tariffs, or a threatened 25pc tariff against Canada that oil industry officials have said could disrupt the nearly 4mn b/d of crude the US imports from Canada. Trump said today he would immediately begin an "overhaul" of the US trade system to protect domestic workers and to start to "tariff and tax foreign countries to enrich our citizens". In an often-dark, bellicose address reminiscent of his "American carnage" speech eight years ago, the 47th president of the US promised to "reverse the horrible betrayal" and "give the people back their faith, their wealth, their democracy and, indeed ,their freedom. "From this moment on, America's decline is over," Trump declared. In foreign policy, Trump said the US would "reclaim its rightful place" as the most powerful country in the world and reiterated plans to rename the Gulf of Mexico as the Gulf of America. Trump also promised still-unspecified actions to take control of the US-built Panama Canal in response to what he says has been unfair treatment of US ships, a threat that president Jose Raul Mulino has rejected . "We gave it to Panama, and we're taking it back," Trump said. Trump's declaration of an "energy emergency" could bolster the legal rationale for some of energy policies and plans to expedite permitting. US interior secretary nominee Doug Burgum, at a confirmation hearing last week, said emergency action was needed because of a looming "crisis" with the electric grid that he said could result in higher prices and slowing the growth of artificial intelligence data centers. Trump is expected to take action soon to restart licensing of US LNG export terminals and support drilling in the Arctic National Wildlife Refuge (ANWR). Trump said he wanted the US to take advantage of its vast oil and gas reserves, which he said would reduce energy prices, increase energy exports and refill the US Strategic Petroleum Reserve, which now holds 394mn bl of crude and is at 55pc of its capacity, "right to the top". Trump also said he plans to end the "Green New Deal" — a reference to climate programs enacted under former president Joe Biden — and revoke a federal "electric vehicle mandate" he said is threatening the US auto manufacturing sector. Trump has yet to specify which parts of Biden's climate legislation he will overturn, but the White House said the administration intends to consider rescinding all federal regulations that impose "undue burdens" on energy production, end leasing of federal land to wind farms and roll back energy efficiency standards for consumer goods. The White House also said Trump will once again pull the US out of the Paris climate agreement. During his campaign, Trump promised he would cut the price of energy by 50pc within 12 months of taking office. But with regular grade gasoline averaging close to $3/USG and Henry Hub natural gas prices less $4/mmBtu this month, such a dramatic cut in prices would be difficult to achieve without causing major disruptions to industry. Environmentalists and Democratic-led states are also preparing to file lawsuits challenging Trump's deregulatory actions, a strategy they used during his first term with mixed success. Trump was sworn in in a relatively small ceremony inside the US Capitol, after calling off a more traditional, outdoor inauguration because of temperatures that were hovering around 23° F. Among those in attendance was Telsa chief executive Elon Musk, who spent more than $250mn to help elect Trump and is chairing a cost-cutting advisory panel, and other tech industry billionaires. Florida governor Ron Desantis (R). Indiana governor Mike Braun (R) and other top Republicans watched the inauguration remotely. Former president Joe Biden today issued pardons to former chairman of the joint chiefs of staff retired Gen. Mark Milley, key medical adviser during the Covid-19 pandemic Anthony Fauci, leaders of the committee that investigated Trump's actions leading up to the 6 January 2020 attack on the US Capitol, and members of his own family. Biden said those he pardoned did nothing wrong but worried they could face "baseless and politically motivated investigations". By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Houthis signal Red Sea attacks pause after Gaza truce


25/01/17
25/01/17

Houthis signal Red Sea attacks pause after Gaza truce

Dubai, 17 January (Argus) — The Yemen-based Houthi militant group said it will monitor implementation of a temporary ceasefire between Israel and Gaza-based Hamas, raising the possibility of a reprieve for shipping in the Red Sea, but will remain prepared for military action if the deal is breached. "Our position regarding the situation in Gaza is linked to the position of our brothers in the Palestinian [armed] factions," Houthi leader Abdul-Malik al-Houthi said in a televised speech on 16 January. "We will continue to monitor the stages of implementation of the ceasefire agreement in Gaza, and any Israeli [violation], we will be directly ready to support militarily the Palestinian people." Al-Houthi's remarks suggest a halt in his Iran-backed group's campaign against shipping passing through the mouth of the Red Sea and against Israel directly. But with no clarity if he was referring to attacks on Israel or shipping lanes, shipping firms are likely to remain cautious about returning to the Red Sea. The Houthis began attacking commercial vessels with western and Israeli affiliations in the Red Sea and Gulf of Aden following an escalation of fighting between Hamas and Israel. Al-Houthi said his group have carried out 1,255 operations, including using ballistic missiles, drones and gunboats, since November 2023. But the risk of an attack in the Red Sea remains despite the ceasefire between Hamas and Israel, tanker owner Frontline said today. "We [are] all hopeful with the ceasefire, but… any ceasefire will be vulnerable with risk of [a] crew being caught if it breaks," Frontline chief executive Lars Barstad wrote on X. The possibility of an attack has compelled many ship operators to forego the Suez Canal in favor of longer voyages around the Cape of Good Hope in the last year, adding time and cost to movement of commodities. Transit of liquid and dry cargoes through the Suez Canal totaled 343mn t last year, less than half the 763mn t in 2023, according to data from Kpler. The ceasefire deal was announced late on Wednesday, 15 January, by Qatar and the US, two of the three countries that have been helping to mediate the negotiations between Israel and Hamas. Egypt is the third. Israel's security cabinet will meet today to sign off on the deal, and will send it for approval from the full government. By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia rejects gas exploration permit near Sydney


25/01/17
25/01/17

Australia rejects gas exploration permit near Sydney

Sydney, 17 January (Argus) — Australia has refused further permits to two explorers for the controversial petroleum exploration permit 11 (PEP-11) in the offshore Sydney basin, citing public interest and financial stability concerns. The 4,500km² block near the NSW state cities of Sydney and Newcastle contains shale and conventional gas reserves. It was controlled by 85pc stakeholder Asset Energy, 100pc-owned by unlisted oil and gas explorer Advent Energy, and 15pc owner Australia-listed Bounty Oil and Gas. The Commonwealth-New South Wales (NSW) offshore oil joint authority refused the stakeholders' PEP-11 applications on 16 January, federal Labor industry minister Ed Husic said on 17 January. "The joint authority refused the applications for reasons of public interest, concerns about the applicants' estimate of the cost of works and their ability to raise the necessary capital to fund the proposed works," Husic added. The firms were initially refused an extension for PEP-11 in 2021, by then Coalition prime minister Scott Morrison. But Asset appealed this decision , alleging procedural unfairness. Electorates in the northern suburbs of Sydney were considered crucial in Australia's 2022 federal election, which Morrison and his Coalition ultimately lost. Gas exploration and production is politically unpopular in many parts of Australia, despite ongoing concerns about energy shortfalls. Bounty claimed PEP-11 contains potential gas resources of 4.7 trillion ft³ (133bn m³) but the region has not produced any commercial quantities to date. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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