Osaka Gas plans overseas LNG sales, eyes German deal


OSAKA -- Energy provider Osaka Gas looks to begin selling liquefied natural gas abroad as soon as 2018, seeking to profit from foreign markets hungry for the fuel as competition in Japan crimps business growth.


The Japanese company is working toward an agreement to sell LNG made from U.S. shale gas to Uniper, a unit of German energy provider E.ON. Uniper handles energy trading and fossil-fuel power generation.


The deal likely will involve a roughly 20-year contract under which Uniper would be responsible for shipping the gas from the point of production. As much as 800,000 tons of LNG would be supplied yearly, or one-tenth of the volume Osaka Gas handles. More than 10 million tons would be supplied over the life of the deal.


The LNG sold to Uniper would be exported from the Freeport liquefaction plant and loading facility under construction in the U.S. state of Texas. Osaka Gas in 2012 made a 20-year agreement with the facility entitling it to 2.32 million tons of LNG a year starting in 2018.


That figure totals nearly 30% of the Japanese company's current annual imports of the fuel. But LNG sales to Osaka Gas's own customers are expected to grow only 1% or so per year until fiscal 2020. The company thus will resell as much as 30% of its allotment from the Freeport project to other energy companies, thanks to a flexible contract that does not specify a destination for the fuel.


Osaka Gas is also seen as able to resell around 40% of the LNG from shares in two Australian projects. Existing Japanese partners will absorb part of that. But the company aims to develop a reliable way to sell gas to overseas energy companies with higher demand, turning LNG trading into a new revenue source. The European market shows particular promise, as a move away from nuclear energy is raising demand for fuels such as LNG.

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