Japan's major gas retailers Tokyo Gas, Osaka Gas and Toho Gas have spun off their pipeline service business from production and sales operations in the final stage of liberalisation of the country's retail city gas market.
Subsidiaries Tokyo Gas Network, Osaka Gas Network and Toho Gas Network took over the firms' pipeline service operations on 1 April. Other small city gas distributors are not required to spin off their pipeline service business. But they should continue to separate the accounting of their pipeline service business from that of other operations.
The legal separation of pipeline service from gas production and sales operations is aimed at encouraging competition in the retail city gas market, which was liberalised in April 2017. Neutralising pipeline operations helps create a competitive environment and fair conditions to encourage new businesses to enter the city gas sector, Japan's trade and industry ministry (Meti) said.
Japan has been gradually deregulating its city gas sector since 1995, although progress lags that of the electricity market that was deregulated in 2016.
The country's city gas sales rose by 4.1pc on the year to 37.7bn m³ in 2021, according to data from Meti. But demand for main city gas feedstock LNG dropped by 5.1pc from a year earlier to 24.2mn t in 2021, as domestic gas retailers have been increasing purchases of lean LNG, which has a lower calorific value compared to conventional gas and so requires more LPG. Use of LPG, a heat additive for city gas, increased by 20pc on the year to 1.2mn t in 2021.
