Japan, the world’s biggest buyer of liquefied natural gas, plans to form an international consumer group to study ways of reducing import costs.
The government-affiliated Institute of Energy Economics, Japan, is proposing joint research with organizations in Asia and Europe on issues in LNG markets, Minister of Economy, Trade and Industry Toshimitsu Motegi told a conference of LNG-producing and -consuming nations in Tokyo on Tuesday.
To ensure competitive and stable supplies, the ministry will also examine “new types of joint procurement involving multiple LNG-importing entities” from this fall, Motegi said at the gathering.
Japan had to import more LNG and other fossil fuels for power generation after the Fukushima nuclear disaster forced utilities to shut down their reactors for safety checks. With the nation’s last operating commercial reactor set to be taken offline this month for an inspection, the government is seeking ways to lower costs, including through boosting LNG shipments from North America, where production has surged amid a shale gas boom.
The nine Japanese power utilities that operate nuclear plants will face a ¥3.8 trillion hike in combined fuel costs this fiscal year compared with fiscal 2010 because of the reactor shutdowns, the government estimated in April. Of this total, LNG will account for ¥1.6 trillion, or 42 percent.
The country paid an average price of $15.11 (¥1,500) per million British thermal units for LNG in June, according to data from LNG Japan Corp. That compares with an average of about $3.80 for U.S. natural gas futures traded in New York.
The United States has approved exports of LNG from three projects to countries with which it doesn’t have free trade agreements, including Japan. Tokyo expects Washington to grant approvals to two more, allowing shipments of around 15 million tons a year after 2017, which would cover about 20 percent of the nation’s requirements, according to Motegi.
“With the shale gas revolution in the U.S., the doors have opened for a competitive supply of LNG to the market,” the METI chief said. “We welcome LNG exports from the United States as an extremely effective method to ensure both a stable supply of energy and a reduction in import costs in the LNG markets in Asia and Europe.”
Motegi and Indian Petroleum Minister Veerappa Moily signed an agreement Monday to collaborate on ways to reduce LNG import costs. Japan and India supported the start of the consumer group, they said in a joint statement before the industry conference in Tokyo.