September 14, 2011 / 3:46 AM / 8 years ago

Japan to start buying LNG from U.S. by 2015: report

TOKYO (Reuters) - Japan plans to start importing liquefied natural gas (LNG) from the United States as early as 2015 to secure a steady supply amid growing demand for the fuel, the Nikkei business daily reported on Wednesday.

Japan is currently unable to import U.S. LNG without approval from U.S. authorities, although a Japanese trade ministry official said on Wednesday that it was seeking approval for imports by Japanese firms.

“Japan asked the U.S. to promote exports,” the official said, adding that Japanese Senior Vice Minister of Economy, Trade and Industry Seishu Makino made the request to U.S. Energy Secretary Steven Chu on Tuesday as Japan seeks stable LNG supplies.

The Nikkei said Japanese power and gas utilities would initially import 2 million to 3 million tonnes of LNG a year, while the trade ministry estimates U.S. shipments could eventually make up 10 percent of Japan’s LNG imports.

Gas extracted from shale rock formations will be liquefied in Texas and Louisiana. The LNG will then be shipped to Japan via the Panama Canal, Nikkei said.

Some Japanese companies have expressed hopes for U.S. exports of LNG.

Osaka Gas Co, Japan’s No.2 natural gas distributor, sees the United States as a promising shale gas exporter. “Japan can be a destination when an expansion of the Panama Canal in 2014 allows large LNG carriers to get through the canal,” Kenji Kawamoto, an executive officer in charge of overseas business development, told Reuters last week.

Japan’s third-largest trading firm, Sumitomo Corp, is eyeing more upstream investment opportunities in U.S. shale gas and looking to pick up shale oil assets there, as it sees those markets growing, a senior official told Reuters in July.

The official said obstacles to exporting U.S. shale gas, such as U.S. export regulations and the cost of establishing facilities to liquefy gas for export, could be reduced as some U.S. LNG import facilities are looking to become export facilities to sell surplus gas supplies.

Mounting public concerns over nuclear safety after the Fukushima Daiichi radiation crisis have made it difficult since the March 11 earthquake to restart reactors once they shut for routine maintenance, forcing utilities to tap fossil fuels to make up for lost nuclear power generation.

Demand for natural gas is expected to rise for years to come, with Japan’s LNG imports climbing at a record pace this year as utilities ramp up gas-fired generation.

Japan’s 10 regional power firms used a record 4.81 million tonnes of liquefied natural gas in August to help offset a record low nuclear utilization rate.

LNG Imports this year are set to jump 12.2 percent to 78.6 million tonnes, exceeding the record of 70 million tonnes in 2010/11.

Japan’s top three sources of LNG imports are Malaysia, Australia and Indonesia, although it recently resumed imports of LNG from Norway for the first time since 2008.

Reporting by Sumit Jha in Bangalore, Chikako Mogi and Risa Maeda in Tokyo; Editing by Edmund Klamann

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