In a keynote speech at an LNG conference in Tokyo, which saw over 1000 experts and businessmen attend from over 50 countries, Japanese industry minister, Toshimitsu Motegi, outlined growing discrepancies in the global LNG market. He called for a rebalance in the industry and for a reduction in the cost of LNG for Asian markets in what he labelled was now an “Asian premium”.
"There is strong concern among the public over the surging demand and soaring prices for LNG," Motegi stressed. "Increases in fuel procurement costs impose a heavy burden on the Japanese economy."
Japan, the world’s largest importer of LNG, and other Asian countries, typically pay more for the price of LNG than Eurpoean or North American counterparts.
Motegi revealed that the LNG price for Japan was about US$ 16.3 per million Btu, whilst the price in the US stands at US$ 3.8 per million Btu, a consequence, Japanese officials explain, of long-term contracts in Asia and the connection to oil prices. Officials also remarked that despite changes in the worldwide production and distribution of LNG, and the US shale gas revolution, prices have continued to rise.
Motegi warned that domestic companies were seeking business out of the Asian region due to high prices.
With nuclear power in Japan now supplying just 3% of the nation’s electricity following the Fukushima plant disaster in 2011, LNG now provides 50% of Japanese energy. LNG companies in Japan can enjoy little or no benefits, however, according to TEPCO president Naomi Hirose, whose company, despite buying high-volume bulk of LNG, is yet to see dividends.
Officials from outside the region, however, remained robust on the issue and that Asian importers must accept highly-priced LNG. Speaking at the summit, Mohammed Bin Saleh Al-Sada, minister of energy and industry in Qatar, outlined that both capital investment and consumer steadfastness was crucial to the LNG industry.
Edited from various sources by Ted Monroe
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