TOKYO, Aug. 27 (UPI) -- As part of its push for cheaper prices of liquefied natural gas and more sources for imports, Japan plans to host an LNG conference next month, a government official said.
"Reducing LNG costs is a crucial policy issue for Japan right now," Shinichi Kihara, who heads the natural resources and energy agency within the Minister of Economy Trade and Industry, was quoted as saying in The Australian newspaper. Kihara said that high gas prices coupled with record demand in the wake of the Fukushima disaster were hurting Japan's trade balance.
Delegates from potential new suppliers in Africa will be invited to the conference, along with traditional gas producers from Australia and the Middle East.
Japan is now the world's top LNG importer. In the 12 months ending March 2013 it imported 86.9 million tons of LNG.
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The government aims to change the traditional pricing model of linking LNG's cost to oil for LNG imports, which dates back to the late 1960s.
Japan now pays $16 per thousand British thermal units for LNG, while the price in the United States was only $4, Kihara said. Factoring for the liquefaction process and transport, Kihara noted that the price from the United States jumps to $11 or $12, but "that's still 30 percent cheaper than what we are paying now," he said.
Buying U.S. shale gas was like purchasing from a "supermarket" at true market prices, he added.
The Australian report notes that the Japanese government is encouraged by the Obama administration's decision to issue an export permit for shale gas from the Freeport LNG project in the United States and is confident that permits will also be issued for the Cameron terminal in Louisiana and Cove Point in Maryland.
"That's going to change the game," Kihara said.
Furthermore, any success Japan may have in its attempts to change the LNG pricing structure could adversely affect Australia's LNG sector, which is facing massive cost increases.
Japan currently buys 70 percent of Australia's LNG exports. Australian LNG exports totaled $11 billion in 2010-11 but are expected to reach $30 billion in 2016-17.
A report by Japan's Institute of Energy Economics released earlier this month found that Japan is likely to continue to boost gas imports to record levels even if it restarts some of the country's stalled nuclear plants.
Japan's Nuclear Regulation Authority is reviewing applications from utilities to operate about a dozen of the country's 50 reactors, shut down in the wake of Fukushima.
But as Fukushima's crisis increasingly worsens, the fate of those applications is uncertain.
