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Japan’s Kyushu Electric sucks dregs out of LNG cargoes amid power crunch

Friday, 15 January 2021 | 13:00

Japan’s Kyushu Electric Power is buying the remainder of cargoes of liquefied natural gas (LNG) left after tankers discharge the fuel at ports around Asia as it scrambles for supplies to fuel power stations as electricity demand surges.

The unusual move by Kyushu Electric underscores the power crunch in Japan and other north Asian countries as exceptionally low temperatures grip the region, sending demand for heating and electricity prices through the roof while LNG suppliers have struggled to meet power companies’ needs.

“As an emergency measure, we have begun buying 2,000-4,000 tonnes of LNG left in tankers in Asia after discharging to secure fuel,” a Kyushu Electric spokesman told Reuters by phone on Wednesday.

Tankers typically leave what is known in the industry as “heel” LNG in their tanks after discharging cargoes to keep them at the super-cold temperatures required to make natural gas liquid for transport.

Kyushu Electric is also asking other utilities to supply any excess LNG supplies and to swap delivery schedules where possible, the spokesman said.

Benchmark power prices in Japan hit a record high of 232.2 yen ($2.24) per kilowatt hour on Wednesday as the cold snap continued although forecasters are expecting temperatures to rise in the coming days.

Japan’s utilities on Tuesday also asked businesses and residential users to save power as electricity generators resorted to using fuel oil, instead of coal, to meet the demand for heating.

Japan’s power market regulator said on Wednesday there was no “improper behaviour” found in trading on the electricity exchange as prices hit record highs with rising demand for heating with frigid temperatures gripping much of the country.

“We have not found any improper behaviour in auctions for spot trading, but we will continue to closely watch the activity,” Yoshiaki Kuroda, director of market policy planning at the Electricity and Gas Market Surveillance Commission, told Reuters.

Last week, Kuroda said the commission had stepped up surveillance of the market as prices rose sharply.
Source: Reuters (Reporting by Yuka Obayashi, Writing by Aaron Sheldrick, Editing by Sherry Jacob-Phillips and Louise Heavens)

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