Japan's Osaka Gas looks to Europe to sell spare LNG cargoes

Japan’s Osaka Gas has offered two liquefied natural gas (LNG) cargoes from the newly-commissioned Freeport LNG project in the United States for delivery into Europe, industry sources said.

Mild weather in Japan and a weaker Chinese economy have helped to drag the global LNG market to multi-year lows and forced Asian sellers to seek alternative markets.

Osaka Gas has offered the cargoes for delivery into Europe between July 5 and 13 and Nov. 9 and 17, said three of the sources, who asked not to be named because they are not authorised to speak to the press.

Bids, which are linked to Dutch TTF prices, are due by Jan. 22, they added.

The Freeport project shipped its first LNG cargo for Train 1 from its liquefaction facility located on Quintana Island in Freeport, Texas, in September, last year.

Osaka Gas and JERA Co, a joint venture between Tokyo Electric Power Co and Chubu Electric Power Co, are expected to each lift half of Freeport LNG Train 1’s total contracted capacity of about 4.64 million tonnes per annum (mtpa).

Freeport has liquefaction tolling agreements with Osaka Gas and JERA from Train 1 for approximately 20 years. Under the deal, both companies will secure LNG without destination restrictions, increasing selling and pricing options.

With a mild winter reducing Japan’s appetite for LNG, Europe is the most likely destination for these cargoes, given cheaper freight rates than to Asia, a Japan-based trader said.

Freeport is expected to load 11 cargoes in January, up from 7 in December, ship-tracking data from Refinitiv Eikon showed.

Freeport said on Jan. 17 it had started commercial operations for the second liquefaction train with the commencement of gas deliveries from BP under a 20-year tolling agreement. (Reporting by Ekaterina Kravtsova in LONDON and Jessica Jaganathan in SINGAPORE, additional reporting by Yuka Obayashi in TOKYO; Editing by Himani Sarkar and Shailesh Kuber and Barbara Lewis)