Japanese power firm seeks flexibility to divert LNG cargoes

Kansai Electric Power Co., which already has resold at least three LNG cargoes since last fall, will seek the contractual right to divert future surplus cargoes in new talks with suppliers.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Nov. 13 -- Kansai Electric Power Co., which already has resold at least three LNG cargoes since last fall, will seek the contractual right to divert future surplus cargoes in new talks with suppliers.

Masanori Kataoka, executive director of Kansai's fossil fuel purchasing group, said the contractual right to divert cargoes would provide protection for utility firms that have supply contracts to last 20 years or more while Japan’s demand for LNG is declining.

"This would help them reduce the risk of having unsold stockpiles" of LNG, Kataoka told Dow Jones Newswires in an interview. A more flexible LNG supply is critical because Kansai plans to run its coal-fired Maizuru electric power station and its nuclear power stations close to full capacity, Kataoka said.

Earlier this week, Kansai became the first Japanese utility to resell cargoes of LNG, after falling domestic power demand left it with surplus gas in its tanks, someone familiar with the matter said.

Kansai reportedly reloaded LNG from a tank at its Sakai receiving terminal near Osaka to a vessel and resold it. The company also reportedly diverted at least two other LNG cargoes this year to buyers in Asia and outside of Asia.

Contact Eric Watkins at hippalus@yahoo.com.

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