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Japan seeking strength in numbers

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LNG Industry,

Bloomberg is reporting that, in the increasingly competitive world of Japan’s energy market, there may be safety in numbers.

Gas sellers from Japan are considering joining together to get cheaper fuel from their suppliers and help them undercut competitors in the US$21 billion retail gas market, which the country is opening to new players in April. 

Tokyo Gas Company has said it sees more than a dozen Japanese LNG importers possibly joining into three large partnerships to secure cheaper fuel through greater bargaining power.

The opening of the retail gas market of more than 26 million customers follows a similar move in electricity last April as part of the Japanese Prime Minister’s drive to spur competition and drive down prices. The liberalisation, coming decades behind efforts in Europe and the US, is forcing entrenched monopolies to face new competition from both traditional suppliers and new entrants.

In the increasingly competitive environment for customers at home, cooperation on fuel procurement to source cheaper supplies overseas will become necessary.

Japan’s biggest power producers are already ahead of the game. Tokyo Electric Power Company and Chubu Electric Power Company integrated their fuel-procurement operations last year into a joint venture.

Smaller players are taking initial steps at following the giants’ lead. Tokyo Gas is considering cooperating with Kansai Electric Power Company, in areas including fuel procurement and development of power plants.

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