Risk of Inability to Pass Higher LNG Procurement Costs Through to Sales Prices
First written in FY2018. 4 of 8 entries say "Materialised", first in FY2025-H1. Latest entry: 2026-08-06.
Japan Petroleum Exploration moved to the "Worse" side of this theme in 2024, 2 years after the typical company in this theme (2022).
The whole theme swung hardest in 2022: 4 of 8 companies on the "Worse" side.
1 other company's latest entry also says "Materialised".
- FY2026WorsenedAnnual report
「Rising crude oil prices and a weaker yen may increase revenue and profit, while higher costs from unplanned spot LNG procurement and the suspension of production and operations at the Garraf oil field in Iraq may reduce profit.」
The Company added a specific impact channel for the risk of being unable to pass procurement costs through amid LNG price and foreign exchange fluctuations: higher costs from unplanned spot LNG procurement due to the situation in the Middle East. - 2026-04-17WorsenedOccurring Fact
「As the de facto blockade of the Strait of Hormuz continues, replacement LNG cargoes for the two cargoes planned for procurement from within the Persian Gulf in the first quarter of FY2026 have already been procured on the spot market from other production regions. As a result, procurement costs for this LNG are expected to rise substantially from before tensions in the Middle East escalated.」
In response to the de facto blockade of the Strait of Hormuz, two LNG cargoes have already been procured on the spot market from other production regions, giving concrete form to the expected substantial increase in procurement costs. - FY2025MaterialisedAnnual report
「The main reason for the ¥1.1 billion decline in profit in the Infrastructure and Utilities Business was that the decrease in timing-related gains arising before raw material and fuel costs for natural gas and electricity were reflected in their respective selling prices outweighed the profit contribution from higher liquefied natural gas sales volumes.」
The timing mismatch between the reflection of raw material and fuel costs and selling prices was reflected in the annual results as a ¥1.1 billion decline in profit in the Infrastructure and Utilities Business. - FY2025-H1MaterialisedAnnual report
「Revenue in the Japan segment increased by ¥16,145 million year on year, or 14.5%, to ¥127,733 million, mainly due to higher sales volumes of liquefied natural gas. Segment profit decreased by ¥5,797 million, or 22.0%, to ¥20,544 million, mainly because higher crude oil prices and a weaker yen increased LNG procurement costs, worsening the sales margins for natural gas, including LNG, and electricity.」
Higher LNG procurement costs caused by rising crude oil prices and a weaker yen could not be absorbed through selling prices and other measures, resulting in weaker sales margins for natural gas and electricity and a ¥5,797 million decline in Japan segment profit. - FY2020RestatedAnnual report
「The company is taking measures including appropriately passing fluctuations in LNG procurement prices on to selling prices. However, if it is unable to pass through those fluctuations sufficiently, this may adversely affect the financial condition and operating results of the group.」
The Company continues to address the earnings risk of being unable to pass higher LNG procurement prices through to selling prices, including through pass-through measures. - FY2018First statedAnnual report
「LNG procurement prices are variable and affected by crude oil prices and exchange rates. If procurement prices rise sharply and the Company is unable to pass the increase through to selling prices, this could adversely affect the performance of the Group.」
In addition to the volume-fixing risk arising from take-or-pay arrangements, the Company has disclosed the earnings risk of being unable to pass higher LNG procurement prices through to selling prices.