Japan's Osaka Gas eyes LNG terminals in SEAsia, LNG as transport fuel
SINGAPORE (Reuters) — Japan’s Osaka Gas Co is looking at the possibility of building LNG terminals in Southeast Asia and using the fuel for transport as it expands its business, a senior company official said on Tuesday.
“We are looking into the possibility. Yes, we have it in mind that we like to do an LNG terminal business in Southeast Asia,” Yoshihiko Kimata, representative in Southeast Asia for Osaka Gas, told reporters on the sidelines of the Singapore International Energy Week. He did not give further details.
Kimata said Osaka Gas has also launched an experimental project with Mitsui O.S.K. Lines where LNG from its terminal is used in the latter’s tugboat.
“It’s a small tugboat. We just started. This market is a very promising one,” he said. But he added that LNG may be too costly as a transportation fuel for now even as efforts are underway globally to switch to cleaner fuel.
To combat pollution, the International Maritime Organization is looking to impose a global cap on sulfur dioxide emissions from 2020. This would see sulfur emissions fall from the current maximum of 3.5% of fuel content to 0.5%.
Osaka Gas is also in talks with LNG sellers to review destination clauses in its supply contracts following a ruling by Japanese authorities that the provisions are anti-competitive.
The ruling by the Fair Trade Commission earlier this year that restrictions on reselling contracted LNG cargoes breach competition rules looked set to shake up the Asian market in much the same way as in Europe in the last decade.
The FTC had urged buyers to revise existing contracts to remove the clauses as quickly as possible.
“We are always asking for this clause to be relaxed,” said Kimata.
“We are talking with the sellers. Maybe all the Japanese trading entities are now making more efforts to achieve this,”
But he said not all of Osaka Gas’ LNG term contracts bear the clause.
“Some of them are a bit relaxed...There is this possibility of flexibility in the contracts,” he said.
Reporting by Seng Li Peng; Additional reporting by Osamu Tsukimori in TOKYO; Editing by Manolo Serapio Jr.
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