Energy Department Approves Expanded LNG Exports to Japan

by Marilou Moursund on May 21, 2013

in Energy,Foreign Markets,Geopolitical

Japan has had soaring energy costs since the meltdown of the Fukushima nuclear plant, and this approval is welcome news to them.  From the linked Japan Times article:

Since Japan is poor in natural resources, it has been longing to import U.S.-produced LNG emerging from the shale gas boom.

This is not only because the price of U.S. natural gas is  around a quarter of what it is now paying for LNG imports, but also because it increases the nation’s bargaining power against other suppliers.

Japan imports LNG from Indonesia, Australia, Malaysia, and the Middle East, among other areas, and the pricing system varies depending on the source.

Japan, which can only  import natural gas in liquefied form, has been purchasing the most expensive LNG in the world under long-term contracts linked to crude oil prices, which remain high.

The government has been increasingly wary about the impact of high fuel costs on the economy, particularly since the Fukushima nuclear disaster resulted in the loss of most atomic power, forcing utilities to return to thermal power generation.

LNG imports reached ¥6 trillion in 2012, compared with ¥3.5 trillion in 2010. Japan also suffered its first annual trade deficit in 31 years in 2011.

“I welcome from the bottom of my heart the U.S. approval of LNG exports,” trade minister Toshimitsu Motegi said Saturday.

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