Japanese LNG Stocks To Witness Recovery in Winter

The industry ministry said on Sept 27 that liquefied natural gas (LNG) stocks held by Japan's major electricity utilities will likely rise in the run-up to the peak winter demand season, after stocks fell to their lowest level since early 2021. Since May, LNG stocks have been declining as a long, hot summer increased the use of air conditioners, increasing demand for power and fuels. LNG inventories held by major Japanese power companies, a key indicator of the country's stock levels, fell to 1.56 million metric tonnes on September 24, according to data released by Japan's Ministry of Economy, Trade, and Industry (METI).

That was lower than the five-year average for this time of year, and it was the lowest since January 2021.

Japan was the world's biggest LNG buyer in 2022. Electric utilities hold about a half of the country's LNG inventories, with the remaining held by city gas suppliers.

"The utilities usually build up inventories from summer to fall, but the longer-than-usual summer heat has caused inventory levels to drop," Kaname Ogawa, director of the METI's electricity infrastructure division, said.

"But we expect a recovery from now," he told an expert committee on basic policy for electricity and gas.

For this winter, major utilities have secured the fuel needed to meet the same level of demand as in past winters, the ministry said in presentation material.

According to the Japan Meteorological Agency, Japan experienced the highest average summer temperature since records began in 1898, with the average temperature for June-August exceeding the 30-year average by 1.76 degrees Celsius.

For the winter, the METI estimates that all regions have a reserve ratio of power generation capacity of 5%, which is higher than the minimum of 3% deemed necessary to ensure stable supply.

"With the ratio higher than the past two years, it looks unnecessary to conduct any public auctions to secure additional power supply capacity," Ogawa stated.

"However, this is not a relief because many old thermal power plants support the 5% ratio." "We'll take action if necessary," he said.