North Asia & Australasia

SATOSHI YOSHIDA Senior Adviser, Japan Gas Association, and IGU Regional Coordinator.

Energy security and climate change remain at the top of the agenda. The natural gas market is easing but prices are still high. E-methane, ammonia and hydrogen projects are advancing to meet low-carbon fuel demand in the region.

China yielded its position as the world’s top LNG importer to Japan last year, but it could reclaim the status in 2023.

» In December, HSBC projected a 5.2% growth in the Chinese economy in 2023, while Morgan Stanley’s forecast is 5.4%.

» Economic growth will trigger more energy demand. Gas consumption in 2023 will rise – potentially by double digits.

» Growth in domestic gas production is likely to remain steady, so much of the increase in gas demand will have to be covered by LNG imports. Late last year, state-owned energy company CNOOC projected that gas imports in 2023 would increase by 7%.

» China’s LNG imports from Australia and the US dropped 30% and 77% respectively from 2021, to 21.9 MT and 2.09 MT.

China is looking to the Middle East to diversify LNG supply.

» Oman LNG has signed a four-year contract with China’s Unipec to deliver 1 MTPA of LNG from 2025.

» China is importing more LNG from Qatar. Qatari shipments increased 75% last year to 15.7 MT, accounting for a quarter of China’s total imports, even as those total imports shrank by nearly 20%.

» It has also been reported that China National Petroleum Corp (CNPC) is near to signing a contract to buy LNG for 30 years or more from QatarEnergy’s North Field expansion project. If signed, this would be the second such deal between Qatar and China.

China’s maritime decarbonisation.

» China’s maritime industry is seeking low-carbon fuel to comply with new IMO standards and ammonia and hydrogen derivative fuel, produced from green hydrogen, are seen as the solutions.

» China Classification Society (CCS), Singapore’s SDTR Marine (SDTR) and Shanghai’s Merchant Ship Design & Research Institute (SDARI) have jointly developed an 85,000-dwt ammonia-fuelled bulk carrier, CCS said on February 22.

Japan is once again the largest LNG market.

» Japan imported 71.99 MT of LNG in 2022, down 3.1% versus the previous year.

» Imports in January came to 6.82 MT, up 0.54% year on year but down 15% compared with the level in January 2021. The average import cost was 128,080 yen ($941.5) per T, which was 156% more than in January 2022 and 282% more than in January 2021. The cost reached a record high of 164,922 yen per T in September 2022.

Japan is progressing plans to substitute city gas with e-methane, with two production projects underway in North America.

» Osaka Gas is conducting feasibility studies on the potential use of Cameron LNG and Freeport LNG to liquefy e-methane produced at locations in the surrounding areas. The partners in the project are Osaka Gas USA, Tallgrass, and Green Plains. This e-methane will be produced from blue hydrogen and biomass-based CO2, captured at bioethanol refineries operated by Green Plains. It will then be liquefied and transported to Japan to substitute city natural gas. The aim is to produce up to 200,000 TPA of e-methane by 2030. In the future, blue hydrogen could be substituted with green hydrogen.

» The other project is in Texas/Louisiana and involves Osaka Gas, Tokyo Gas, Toho Gas, and Mitsubishi. It is set to produce 130,000 TPA of e-methane beginning in 2030.If these projects proceed as planned, they will supply enough e-methane to replace 1% of Japan’s city natural gas, in line with the city gas industry’s target.

» The real challenge will be supplying enough e-methane to raise this to 90% by 2050.

» Gas utilities are proceeding with multiple e-methane feasibility studies, including site analyses, in a number of countries and regions, such as Australia, Singapore, North America and South America, to secure more sources of e-methane imports for Japan. The ideal conditions for producing e-methane include availability of low-cost hydrogen, abundant CO2 sources, and easy access to gas transmission pipelines, liquefaction and LNG shipping.

New Zealand’s Southern Green Hydrogen project will produce 500,000 TPA of ammonia for domestic use and export.

» Meridian Energy, New Zealand’s largest power company, said on November 29 that it had selected Australia’s Woodside as the preferred partner of Southern Green Hydrogen.

» Japan’s Mitsui & Co. is also in discussions to join the project as well as develop the potential market for ammonia offtake, with the aim of creating a collaboration that covers the full hydrogen and ammonia supply chain.

» Meridian, Woodside, and Mitsui will work towards starting front-end engineering design (FEED) for the project. A final investment decision will follow the development stage.

Australian LNG export volumes and revenues fell month on month in January.

» According to EnergyQuest, Australia’s LNG export revenue in January was A$7.2bn ($4.93bn), lower than the A$8.6bn in December but up 20% year on year.

» LNG export volumes amounted to 6.57 MT in January, versus 7.2 MT in December. During the first month of the year, 30 cargoes were delivered to China, 37 to Japan and 18 to Korea.

» Western Australian projects earned A$4.5bn in export revenue in January, while Queensland projects earned A$2bn and Northern Territory projects A$0.8bn. West Coast volumes fell to 4.8 MT from 5.3 MT in December, but they were level with shipments in January 2022. West Coast projects operated at 90% of capacity during January.

» East Coast LNG shipments were also slightly down at 1.8 MT in January compared with 1.9 MT in December and 2.1 MT a year earlier. East Coast projects operated at 81% of capacity.

South Korea aims to start importing hydrogen from Malaysia and the UAE by 2027.

» The South Korean government plans to start importing hydrogen produced in Malaysia and the UAE by 2027 for power generation and export after conversion into ammonia, Business Korea reported on January 9. Hydrogen for ammonia production will be produced in Malaysia from hydroelectric power. In the UAE, Korea Electric Power Corp. and Samsung

C&T will produce hydrogen using PV. Supplies from the two countries are expected to amount to 600,000 and 200,000 TPA respectively.

» South Korea is currently testing a hydrogen-LNG fuel mix in combustion. Using a hydrogen-to-LNG ratio of 30:70, CO2 emissions could be reduced by 10%. That reduction rises to 21% using a 50:50 ratio, and 52% using an 80:20 ratio.

» According to Business Korea, there is also a plan to use ammonia produced from hydrogen to cut CO2 emissions from coal-based power generation.

» South Korea’s LNG imports rose to 4.95 MT in January, from 4.50 MT in the previous month.

Chinese Taipei is working to bolster its energy security.

» Chinese Taipei is expanding its natural gas and coal inventories to improve its energy security and make it more resilient to crises, amid growing global geopolitical and economic uncertainty. Chinese Taipei imports 98% of its energy from overseas.

» The economy ministry wants to build new storage facilities to increase natural gas inventories to more than 20 days of demand by 2030, up from 11 days at present. Inventories of coal and other fuels will also be increased in the coming years, under the plan, while crude oil inventories will be maintained at over 100 days of consumption.

» Chinese Taipei’s LNG imports increased to 1.76 MT in January from 1.69 MT in December.