Aug 31, 2022
Japan to Step in to Buy Gas to Avoid Crunch If Prices Surge More
(Bloomberg) -- Japan’s government will step in to buy liquefied natural gas if companies can no longer afford to do so -- an unprecedented step by the nation to avoid a winter supply crunch.
The government will create a framework for the Japan Oil, Gas and Metals National Corp., a state-owned institution, to import LNG in bulk, local broadcaster NHK reported on Thursday without citing any sources. This is the first time the Japanese government will procure fuel on behalf of private companies.
A panel within the trade ministry will meet next week to discuss the measures, NHK said. The officials will also create a plan to limit gas usage by industries in the event of a supply shortage, according to the report.
Japan’s Ministry of Economy, Trade and Industry wasn’t immediately able to comment.
Countries around the world are grappling with surging fuel costs, as supply disruptions from Russia to the US tightened energy markets. Governments are bailing out utilities and are considering price caps to reign in inflation and make sure electricity and fuels continue to flow to households and businesses.
Read more: EU Reaches Gas Storage Goal Early Despite Russian Supply Cut
Japanese power producers, which typically hold roughly two weeks of LNG supply in storage, are snapping up cargoes to prepare for winter. But the recent surge in spot prices has forced some utilities to halt plans to procure supply, according to traders.
Still, LNG inventories held by Japanese utilities were at 2.63 million tons on August 28, the highest level in data going back to April 2017.
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