Osaka Gas shares fall after Freeport LNG outage cuts full-year profit forecast

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The entrance to the Osaka Gas showroom pictured in Osaka, Japan May 22, 2018. Picture taken May 22, 2018. REUTERS/Osamu Tsukimori

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TOKYO, Aug 2 (Reuters) – Shares of Osaka Gas (9532.T) fell on Tuesday after the Japanese town gas supplier sharply cut its full-year net profit forecast due to an impact of nearly 80 billion yen ($611 million) following an outage in the United States. Freeport LNG liquefied natural gas export facility.

After falling 5.5%, shares of Osaka Gas had pared some losses and were trading down 2.3% by mid-afternoon. The benchmark Nikkei 225 (.N225) fell 1.5%.

An explosion and fire on June 8 had knocked out Freeport LNG’s 15 million tonnes per annum (mtpa) Quintana plant, exacerbating global LNG shortages amid reduced gas flows from Russia and weighing heavily on natural gas prices in the United States. Read more

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Osaka Gas, which buys 2.32 million tonnes of LNG from Freeport a year under a long-term contract and has a stake in the project, on Monday cut its net profit forecast by 62% for the year. as of March 31 to 31.5 billion yen from its April estimate of 82 billion yen, citing the negative impact of 79.5 billion yen from the closure of Freeport LNG.

The damages include a one-time charge of 31.4 billion yen recorded in the April-June quarter and higher supply costs, among others, the company said.

Osaka Gas warned in July that it could incur a significant expense, including the cost of alternate supply during the Freeport shutdown period and contract modification.

Freeport LNG plans to resume partial liquefaction operations in early October and return to full production by the end of the year.

($1 = 130.8300 yen)

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Reporting by Yuka Obayashi; Editing by Rashmi Aich

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