SINGAPORE: Key North Asian economies are stockpiling fuel, diversifying sources and conserving power to ensure adequate supplies for winter, as an unprecedented global energy crisis makes spot liquefied natural gas (LNG) purchases costly.
Major LNG importers – Japan, South Korea and China – have been grappling with soaring prices of the super-chilled fuel after Russia cut supplies to Europe following its invasion of Ukraine, leading to a surge in Asian spot prices as well.
A plunge in the value of local currencies from Japanese yen to Chinese yuan against the US dollar has also increased the burden of costly energy imports on these economies.
Led by crude oil, LNG and coal, Japan’s September imports jumped 45.9 per cent year-on-year to hit a record high in terms of value as a weak yen aggravated already high fuel import costs.
“Our basic approach is to have relatively high inventories during this winter … while adjusting the delivery schedule of LNG tankers to reflect demand,” the CFO of Tokyo Gas, Japan’s biggest city gas supplier, said last Thursday.
“If LNG from Russia is disrupted, we will need to negotiate to take alternatives from other suppliers,” Hirofumi Sato added.
LNG inventories at Japan’s city gas providers, as well as major utilities, were above a five-year average, according to their most recent data.
South Korea too is stockpiling LNG and began buying spot cargoes in September, a month earlier than usual, an industry ministry official said.
But analysts warned persistent supply risks or an unexpected cold snap could negate the effects of such well-planned measures as Japan, South Korea and Beijing are, according to Refinitiv forecasts, likely to see a milder winter.