Japan to facilitate LNG allocation across power, gas industries in event of emergency

(Reuters) - Japan plans to introduce a new framework to allow the industry ministry to help redirect liquefied natural gas supplies in the event of an emergency so that gas and power companies do not run short.

The move, announced by the Japanese industry ministry on Monday, comes amid growing uncertainty over LNG supplies given the risk of supply disruptions from Russia due to the war in Ukraine. Problems at facilities of U.S. Freeport LNG and Malaysia LNG have also reduced flows of the fuel.

Under the proposal presented at an industry ministry energy panel meeting, the ministry would act as an intermediary to supply LNG from operators with sufficient stocks to those running short.

The action would be taken based on requests from electricity and gas companies that are short of LNG.

"Both power and gas utilities have secured a solid level of LNG inventories for this winter," an official at the ministry said.

"But it would be better to reinforce the existing framework to make it easier to accommodate the fuels across the power and gas industries in case of emergencies that make it difficult to procure fuel nationwide," he said.

Japan's major electricity utilities held 2.49 MMt of LNG in their inventories as of Oct. 9, higher than the level a year earlier and above a five-year average for the period of below 2 million tonnes, according to a ministry survey.

Japan's city gas providers held 2.54 MMt of LNG stocks at the end of August, the ministry's provisional data showed. That was up from 1.97 MMt a year earlier and above the five-year average.

(Reporting by Yuka Obayashi; Editing by Susan Fenton)

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