TOKYO, Sept 18 Japan's biggest utility, Tokyo
Electric Power Co, is in advanced talks to secure
liquefied natural gas (LNG) supplies from North America and help
reduce high import prices as Japan cuts reliance on nuclear
power after the Fukushima disaster, company officials said on
Plentiful supplies have depressed North American gas prices
to just over $3 per million British thermal units (mmBtu),
sparking interest from Asian markets, where prices for spot LNG
are much higher, at around $13 per mmBtu.
At the same time Japan, the world's largest LNG importer,
has been scouring the globe for supplies of the gas to fuel
power stations as most of the country's nuclear plants have been
closed down since the earthquake and tsunami last year caused
the worst atomic catastrophe since Chernobyl in 1986.
For Tepco, the operator of the Fukushima Daiichi plant,
securing cheaper fuel supplies is a crucial part of its business
reform plans as it faces billions of dollars of compensation
costs for the disaster. The company was nationalized earlier
"We have been in negotiations with several projects,"
Toshiaki Koizumi, the general manager of Tokyo Electric's fuel
department, said at a briefing in Tokyo.
"We want to procure LNG from the United States and Canada
where prices are linked to Henry Hub. The talks have made
progress, but I cannot say when they will be finalised," Koizumi
said, referring to the main U.S. gas distribution centre.
Any agreement to buy U.S. shale gas will be subject to
approval from Washington, which is reviewing whether to allow
export licenses for some buyers of the fuel.
Tokyo has been negotiating with Washington since last year
to allow more shale gas projects to export LNG to Japan, which
hopes to receive LNG shipped via the Panama Canal as early as in
Chubu Electric Power Co, Tokyo Gas, Osaka
Gas Co and Sumitomo Corp have already
announced deals to buy U.S. shale
Tokyo Electric is interested in taking LNG offtake but is
not looking to buy a stake in upstream shale gas and
liquefaction projects due to a lack of funds, Koizumi added.
Currently almost all of Japan's LNG import prices are linked
to oil prices, but many Japanese firms are hoping to shift
benchmark U.S. gas prices at Henry Hub, to cut down on import
Japan has rapidly increased LNG purchases since Fukushima,
with imports growing 17.9 percent to a record 83.2 million
tonnes in the fiscal year ended March 31.
Japan hopes that if the U.S. projects receive formal U.S.
government approval as early as 2015, their shipments to Japan
are likely to be priced at less than $10/mmBtu.
All five major Japanese trading houses have invested in
shale oil and gas projects in North America, spending a total of
more than $13 billion since Sumitomo became the first firm to
take part in a shale gas development in 2009.
Tokyo Electric is currently expected to buy 24.5 million to
25.0 million tonnes of LNG in the business year ending next
March, and a little less than 23 million tonnes in the following
business year if it is able to restart its Kashiwazaki-Kariwa
nuclear plant next year, Koizumi said.
That compared with 24.1 million tonnes purchased in the
business year ended in March.
(Reporting by Osamu Tsukimori; Editing by Aaron Sheldrick and
(firstname.lastname@example.org; 81-3-6441-1857; Reuters