It is highly possible that the restart of U.S. Freeport's LNG plant will be delayed beyond a scheduled date of mid-November, the president of Osaka Gas Co. Ltd. said on Nov. 18, adding that it had not restarted yet.
Osaka Gas, which buys 2.32 million tonnes of LNG annually from the project, understands construction work is on track but regulatory approvals from local authorities may be delayed, president Masataka Fujiwara told reporters, but gave no date for the restart.
A blast and fire on June 8 had knocked out Freeport LNG's 15 million tonnes per year Quintana plant, exacerbating global LNG shortages amid reduced gas flows from Russia.
Freeport had said repeatedly that the plant was on track to return to service in November.
"With a conservative view that the November restart might be difficult, we had been working to secure LNG for a longer period," Fujiwara said, adding a further downward revision to its earnings forecast is not in its scope.
Last month, the city gas provider cut its net profit forecast for the year to March 31 to 29 billion yen ($207 million) from 31.5 billion yen, while increased the anticipated impact on recurring profit from the disruption at Freeport to 109.5 billion yen from its August estimate of 79.5 billion yen.
The Freeport shutdown has forced customers to buy expensive LNG from other sources.
As a shareholder of Freeport, Osaka Gas has no plan to take any legal action to seek compensation, Fujiwara said.
"We appreciate Freeport's efforts to lobby the regulatory authorities and advance the construction as quickly as possible," he said.
Looking at next year, Osaka Gas expects a tight global LNG market as Europe needs to buy more LNG to replace Russian gas.
"The spot LNG prices could rise after spring, so we will keep our long positions [in terms of LNG procurement] to avoid purchases of spot supplies," he said.
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