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Japan in market for US shale-gas LNG

Japan is hoping to meet its energy demand – and cut its growing import bills – by sourcing liquefied natural gas (LNG) from US shale-gas developments and possibly increasing its domestic nuclear power-generation capacity

Japan is hoping to meet its energy demand – and cut its growing import bills – by sourcing liquefied natural gas (LNG) from US shale-gas developments and possibly increasing its domestic nuclear power-generation capacity.

Hiroshi Kondo, Tokyo Gas’ vice president of  European LNG, said Japan imported 87 million tonnes a year (t/y) of LNG last year, up from 79m t/y in 2011. He added total imports are likely to rise further, to around 90m t/y, over the next few years. “Reducing energy costs is essential for Japan and the global economy,” Kondo said. '”The new Japanese government will take a realistic view of energy policy.”

Japan’s LNG import bill rose sharply in the wake of the 2011 Fukushima Dai’ichi nuclear disaster, which saw the country’s nuclear power fleet shut in. Almost all the country’s nuclear capacity remains offline. Nuclear plants provided about 30% of the country’s electricity demand, alongside LNG and coal. Since Fukushima, utilities have been forced to increase LNG and coal imports to meet demand.

In September 2012, the country’s previous government vowed to phase out nuclear power entirely by 2030. However, Shinzo Abe’s Liberal Democratic Party, which won the general election in December, has scrapped this, and is considering whether to allow the full restart of Japan's nuclear capacity.

Kondo said a government decision on new nuclear capacity is expected by July.

Japan, the world’s third largest economy, recorded a trade deficit last year for the first time in 31 years. This was due in large part to the rising cost of LNG imports since the Fukushima  nuclear disaster.

In January this year, Japan said its total trade deficit for 2012 had reached 6.9 trillion yen ($76bn), because of rising energy imports and falling exports of manufactured goods to Europe and China.

Kondo added that the government is hoping to import LNG sourced from US and Canadian shale-gas developments. One of our ideas is to import shale gas from North America to Japan and the Asian markets. Canada has a huge amount of unconventional gas and south Asian players are interested in joining these projects,” Kondo said.

Tokyo Gas is involved in developing shale gas at the Cordova Embayment project in British Columbia. The project, which involves a number of Japanese companies, including Mitsubishi and Osaka Gas, is targeting reserves of up to 8 trillion cubic feet (cf). Tokyo Gas said  the project could produce 500m cf of gas a day, equivalent to 3.5m t/y of LNG, for export to Asian markets.

In the US, only Cheniere Energy's Sabine Pass project has so far been approved for unrestricted shale-gas LNG exports. At present only countries which the US has a free trade agreement with can import LNG from shale gas. Around 17 other shale-LNG export projects have been submitted.

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