Mitsui aims to expand LNG trading operation: executive

REUTERS: Japan’s Mitsui & Co Ltd plans to expand its liquefied natural gas (LNG) trading operation as demand for the cleaner fuel spurs more spot transactions in Asia, a senior executive told Reuters.

The move comes amid a big shift in the market in Asia, which takes in about 70 percent of global shipments of LNG, with traders and end users increasing their ability to trade in anticipation of a supply influx from Australian and U.S. projects.

Utilities such as Tokyo Gas and Kansai Electric Power that often tie up with Mitsui and other Japanese trading houses are expanding trading operations after winning more flexible terms on contracts, allowing them to resell excess cargoes, something unheard of only a few years ago.

“We are going to reinforce our LNG team at our energy trading unit in Singapore as LNG spot trading is on the rise,” Hiroyuki Kato, Executive Vice President of Mitsui & Co Ltd said in an interview on Thursday.

The unit has about 70 staff, mainly focusing on oil, but it will increase the number of LNG traders in the next few years from only a few now, Kato said, without giving details.

Around 260 million tonnes of LNG was shipped globally in 2016, according to the International Group of Liquefied Natural Gas Importers (GIIGNL). Spot trades, defined by GIIGNL as cargoes delivered within three months from the transaction date, totalled around 47 million tonnes, 15 percent higher than in 2015.

Japan takes in nearly a third of global shipments but in the last year China has emerged as a big importer. Kato says Mitsui is betting demand will surge as it did with iron ore, where the trading house has built up expertise.

Mitsui traded 2.8 million tonnes of LNG in the year ended March 31, but will receive more supplies from next year when the Cameron LNG project in Louisiana starts operations.