Japan is the world’s second biggest natural gas importer, and any changes to its domestic affairs in this sector have a domino effect on the global market. In February, utilities TEPCO and Chubu Electric Power signed an agreement to merge their electric power generation activities, thereby creating a conglomerate able to move 35 million t of liquefied natural gas annually, 50% of the country’s total thermal installed capacity. Since the merger was announced yesterday, two major Japanese energy market players have responded. Tokyo Gas and Kyushu Electric Power have come to an agreement to merge their respective LNG procurement operations. This agreement, according to observers, in addition to an answer to the TEPCO-Chubu merger, is also a strategic move ahead of planned regulatory reforms of the Japanese electricity market, as well as a mutual protection measure against natural catastrophes. Thanks to its partnership with Tokyo Gas, the fast-approaching restart of four reactors at the Sendai and Genkai nuclear plants this year will enable Kyushu Electric to free up a portion of already contractually designated LNG, diverting it to the more lucrative consumer market.
From Japanese integration to Russo-Georgian separation. Georgian energy minister Kakha Kaladze, has taken an aggressive stance against Gazprom, announcing that by 2018 his country will no longer buy natural gas from the Russian firm, relying instead entirely on operators in neighboring Azerbaijan. The supply of Azeri gas will be funded by cash payments which Gazprom makes to Georgia in exchange for annually transiting 2 billion cubic meters through the country for export to Armenia.