Japan’s city gas supplier and LNG importer, Osaka Gas, is expecting a higher loss for the fiscal year ending March 2023 due to the prolonged outage of the 15 mtpa Freeport LNG export terminal in Texas.
Osaka Gas takes about 2.32 mtpa of LNG from Freeport LNG’s first liquefaction train under a 20-year deal that started in December 2019. It also has a 10.8 percent stake in Freeport LNG.
However, the terminal in Texas has been offline for some seven months due to an incident that took place on June 8 last year.
The LNG terminal operator delayed the restart of the facility several times.
Freeport LNG is currently in the process of restarting the facility to start producing LNG again for its offtakers Osaka Gas, Jera, BP, and TotalEnergies.
In order to make up the missing volumes from Freeport LNG, Osaka Gas had to buy alternative supplies on the market that resulted in higher costs for the firm and its customers, it said on February 6.
Osaka Gas said that it now expects loss related to the Freeport LNG outage for the fiscal 2022-23 to increase to 149.5 billion yen ($1.13 billion).
This compares to 109.5 billion yen ($829 million) the company estimated in the previous quarter.
The increase of 40 billion yen is “mainly due to the delay in the restart of Freeport LNG’s plant operation and increased costs associated with LNG procurement due to soaring LNG spot prices,” it said.
Osaka Gas posted a 1.3 billion yen ($9.9 million) loss for the April-December period due to increased costs for alternative LNG supplies.
This compares to a profit of 55.1 billion yen in the same period last year.