Gas companies claim that Japan's demand for gas could fall if the war in Iran affects plastics supplies.
Gas company chiefs warned on Wednesday that Japan's gas consumption could fall if the war on Iran continues.
Osaka Gas provides?gas? to factories. If these plants are forced into a production cutback due to a shortage of materials, Osaka Gas's sales of gas will fall, said Osaka Gas president Masataka Fujiwara at a press briefing.
He said that "there will be an effect if our clients are not able to manufacture."
Tokyo Gas?also warned about the possible fallout of a naphtha shortage for manufacturers.
Tokyo Gas President Shinichi SASAYAMA said in a separate press conference that any decision to reduce the activities of our customers, who use naphtha and other petroleum products for their manufacturing operations, could impact on Tokyo Gas' gas sales.
He said that so far, there has not been any immediate impact.
Japan gets around 6% of liquefied gas through the Strait of Hormuz. This is due to the U.S. and Israeli war against Iran. Before the war broke out in February, Japan used to get 90% of its oil through the Strait of Hormuz.
Fujiwara stated that Osaka Gas is one of Japan's largest LNG importers, along with Tokyo Gas and JERA, and has enough fuel to run its operations. Most of the LNG comes from Australia and United States.
He said that "we secure the majority of LNG via long-term contracts and currently there are no long-term 'contracts' for LNG procurement through the Strait of Hormuz." A term contract with Oman had expired last year.
In 2025, LNG imports from Japan, the world's second largest buyer of LNG after China, will fall 1.4% from a year ago to 64.98 millions metric tons. The country is re-starting nuclear power stations, implementing renewable energy, and increasing energy efficiency.
The LNG stocks held by major Japanese utilities increased to?2.39 millions tons for the week ending on March 22. This is a 5% increase from a previous week and its highest level so far this season.
(source: Reuters)
