Tokyo Gas doesn’t expect major supply problems due to Malaysia LNG pipeline disruption

JAPAN’S biggest city gas supplier Tokyo Gas does not expect its procurement of liquefied natural gas (LNG) to be heavily affected by recent disruptions to Malaysia LNG supplies due to a pipeline leak, its finance chief said on Thursday (Oct 27).

Malaysia’s Petronas, which owns Malaysia LNG with Mitsubishi, said earlier this month that it had declared force majeure on gas supply to one of Malaysia LNG’s liquefaction terminals, MLNG Dua, due to a pipeline leak caused by soil movement on Sep 21.

“We are still examining the situation and its impact while discussing with the seller,” Tokyo Gas CFO Hirofumi Sato told a news conference.

“But the damage to the pipeline will unlikely be a decisive factor in causing any major impact on our procurement,” he said, pointing out that the seller is procuring gas from other pipelines, not just the one with the leak.

Asked if Tokyo Gas is well stocked with LNG for this winter, Sato said the company usually fills tanks around November as winter is the peak demand season and that approach will remain unchanged this year.

“Our basic approach, as in previous years, is to maintain relatively high inventories during the winter,” he said.

“We will adjust our vessel allocation plans as much as possible, while keeping a close eye on whether this winter will be a harsh or mild one,” he said.

In August, Tokyo Gas said it had signed a long-term contract with a new Russian operator of Sakhalin-2 energy project to buy LNG.

Asked how the company will respond if supply from Sakhalin-2 is disrupted, Sato said it will negotiate to take alternative supply from other projects and buy LNG from the spot market.

“They are practically the only countermeasures we can take,” he said. REUTERS