Its losses from the resale of LNG grew to 17.9 billion yen ($163 million) by the end of October-December quarter from 14.2 billion yen at the end of July-September period, said Kenzo Kobayashi, manager of operation division of Kyushu Electric.

The losses highlight an issue for Japanese utilities, which have committed to large volumes of LNG on contracts linked to oil prices, while the spot LNG market is tumbling as new projects sanctioned when prices were higher ramp up output just as economic growth slows.

Earlier this month, Asian LNG spot prices dropped to multi-year lows with at least one cargo being sold into Northeast Asia below the psychological barrier of $4 per million British thermal units (mmBtu). The long-term LNG contracts are estimated at more then double the spot price.

Kyushu Electric now predicts recurring profit for the year to March 31 to come to 40 billion yen ($365 million), down from its previous forecast of 55 billion yen.

"Milder than usual weather curbed electricity demand while LNG resale losses increased due to weaker LNG prices," Kobayashi told a news conference, adding an annual LNG resale loss will likely total 18.2 billion yen.

The company is trying to reduce such losses by asking gas producers to delay delivery of some contracted supplies and swapping cargoes with other buyers, Kobayashi said.

(Reporting by Yuka Obayashi; editing by David Evans)