Media: Iran situation may impact LNG purchases, Japanese companies facing challenges

The chaotic situation in Iran may affect the procurement of liquefied natural gas as a fuel for power generation. This is because Qatar, which has been attacked, has stopped production, and sea transport through the Strait of Hormuz is effectively blocked. This is a blow to Japanese power companies that depend on LNG produced in the Middle East. If the conflict continues for a long period, discussions will need to be held to ensure new procurement sources. "The inventories for March and April are sufficient, but if the conflict prolongs, it may affect prices," said the head of JERA, a thermal power generation company jointly funded by Tokyo Electric Power Holdings and Chubu Electric Power. About 10% of JERA's annual imports come from the Middle East. The company plans to increase procurement from Qatar, recently signing a contract to purchase about 3 million tons annually starting in 2028. Tohoku Electric Power Company also procures LNG from Qatar and has begun discussions on the need to find alternative procurement sources. Kansai Electric Power Company, which purchases about 13% of its LNG from Qatar in the fiscal year 2024, expressed concerns, stating that it would be "affected" if the situation continues for a long period.