The Japanese government will provide support through public financial institutions to help utilities secure liquefied natural gas LNG amid a surge in prices, the Nikkei business daily reported on Thursday.
The paper said that the Japan Bank for International Cooperation JBIC will provide low-interest loans to electric power utilities and city gas companies to buy super-chilled fuel from the spot market.
The move is intended to avoid an energy crunch by providing financial support before winter, when heating demand is expected to increase. Spot LNG prices remain at high levels due to the risk of supply disruption from Russia, given its war with Ukraine.
The Japanese industry minister Yasutoshi Nishimura will announce the lending support at the LNG Producer-Consumer Conference 2022, which will be held later on Thursday, the Nikkei said.
Japanese utilities buy the bulk of their LNG through long-term contracts, but about 20 per cent comes from the spot market.
Asian spot LNG prices have gone up this year, hitting a new record high in August, but have since been easing because of high inventory levels and governments' efforts to curb demand in Europe. Market fears that a cold winter in Europe could lead to prices returning to record levels.
It would cost Japan more than 1 trillion yen $6.9 billion to buy 6 million barrels of LNG a year from the spot market if shipments from Russia were stopped completely, the Nikkei said.