Toshiba sees LNG business as big risk
Friday, Aug 18, 2017
The LNG business is posing a “big risk” to struggling Japanese industrial conglomerate Toshiba, the company’s top official has acknowledged publicly, renewing concerns about a possible massive loss from the business.

“We are proceeding with sales activities [regarding the LNG business]. We want to tie our shoes,” said Satoshi Tsunakawa, Toshiba’s president and chief executive officer.

Tsunakawa made the remarks at a press conference held on August 10 to announce the company’s long-delayed financial results for fiscal 2016, which ended on March 31, 2017.

In 2013, Toshiba signed a contract to procure 2.2 million tpy of LNG from the Freeport LNG project in Texas, US over 20 years from 2019.

Toshiba signed the deal with Freeport LNG Development, the project operator, with the hope of selling LNG and power generation equipment to its customers as a package.

But the company has faced difficulty finding buyers for its LNG from the Freeport LNG project, raising the possibility that it might suffer a huge loss of up to 1 trillion yen (US$9 billion) over two decades.

Early this year, Toshiba signed a co-operation agreement with JERA, a joint venture (JV) between Tokyo Electric Power Co. (TEPCO) and Chubu Electric Power.

Under the agreement, JERA is to help Toshiba find buyers for its LNG from the Freeport LNG project. JERA imported Japan’s first cargo of shale-based LNG from the US in January.

An LNG tanker carrying about 70,000 tonnes of the fuel from the Sabine Pass LNG terminal in Louisiana, which is operated by Cheniere Energy Partners, arrived at Chubu Electric Power’s Joetsu LNG terminal on January 6.

Toshiba’s August 10 earnings report for fiscal 2016 came three months later than initially planned, after it finally got a qualified approval from its auditor PricewaterhouseCoopers Aarata (PwC).

Toshiba suffered a full-year net loss of about 966 billion yen (US$8.7 billion) on a consolidated basis in fiscal 2016, the biggest amount on record for a Japanese manufacturing firm.

The company’s liabilities also exceeded its assets by about 553 billion yen (US$5 billion) at the end of March.

Toshiba has been hit hard by a huge loss at its former US nuclear subsidiary Westinghouse Electric, which filed for Chapter 11 bankruptcy at the end of March.

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