Tokyo Gas hailed the agreement by the Group of Seven rich nation on natural gas investment as it posted a record net profit for the 2022/23 fiscal year on the back of stronger LNG prices, though it warned of a drop in earnings for this year.

Japan hosted a G7 ministers’ meeting on climate, energy and environment earlier this month in Sapporo, which agreed that investment in the gas sector can be appropriate – if in line with climate goals – to help address global energy shortfalls.

“The G7 agreement provided some positive factors for us,” chief financial officer Hirofumi Sato told a briefing, noting the recognition of the usefulness of synthetic fuels as an example.

“It is also very significant that they agreed a certain level of investment for gas is necessary,” he said, adding that Japan’s major buyer of liquefied natural gas (LNG) plans to keep investing in gas infrastructure in Asia and U.S. shale gas upstream assets.

Tokyo Gas has LNG and other energy assets globally which helps it to diversify revenue and supply sources as Japan needs to import nearly all its energy resources.

Its net profit grew to a record 281 billion yen ($2.1 billion) in the year ended on March 31 from 96 billion yen a year earlier, supported by higher LNG sales prices and the yen’s depreciation against the U.S. dollar.

LNG prices surged to a record in August 2022 after Russia curtailed natural gas supplies to Europe in response to sanctions imposed for its invasion of Ukraine.

However, for the year ahead, Japan’s top city gas supplier predicted a 64% fall in profit to 100 billion yen on weaker city gas sale volumes and lower electricity sales.

The forecast was based on an assumption it will keep holding its gas assets in Australia which it plans to sell, Sato said, adding it was taking time to coordinate with stakeholders of the projects and it was not clear when a deal could close.

Tokyo Gas plans to keep its full-year dividend payment unchanged at 65 yen per share for this year and buy back up to 12.2% of its shares worth 113 billion yen.

Reuters