Japanese Prime Minister Shinzo Abe said his country wants to be included in the Trans-Pacific Partnership (TPP), which could hasten the export of liquefied U.S. gas to Japan. TPP currently encompasses 11 nations in Asia and the Americas. Randy Bhatia, an analyst with Capital One Southcoast, said Japan’s membership in TPP could boost efforts to export LNG to the country.
Japan has been lobbying Washington to expedite the export of domestically sourced LNG. Japan has imported LNG from a terminal in Alaska on a small scale for decades, but that terminal is now slated to be mothballed (see Daily GPI, March 7). Meanwhile, Japan’s reliance on gas-fired power generation has increased as its nuclear power industry has faltered following an earthquake and tsunami that wrecked the Fukushima Daiichi power plant (see Daily GPI, Sept. 18, 2012).
Acting U.S. Trade Representative Demetrios Marantis said the United States welcome’s Japan’s interest in joining TPP.
“Since early last year, the United States has been engaged with Japan in bilateral TPP consultations on issues of concern with respect to the automotive and insurance sectors and other non-tariff measures, and also conducting work regarding meeting TPP’s high standards.
“While we continue to make progress in these consultations, important work remains to be done. We look forward to continuing these consultations with Japan as the 11 TPP countries consider Japan’s candidacy for this vital initiative in the Asia-Pacific region.”
Last month, Abe and other top Japanese officials met with Sen. Lisa Murkowski of Alaska, the ranking member of the Senate Energy and Natural Resources Committee, to discuss opportunities to export Alaska gas to Japan (see Daily GPI, Feb. 27). LNG exports to Japan would be a “win-win situation” for both countries. They would ensure Japan’s energy security and improve the United States’ trade imbalance with Asia, Murkowski said at the time.
Export of LNG to free trade agreement (FTA) nations is presumed to be in the public interest and is routinely approved by the U.S. Department of Energy (DOE). Exports to non-FTA nations, such as Japan, requires a much more rigorous review by DOE before a license is granted. Numerous U.S. LNG export projects are awaiting DOE’s next move on export approvals to non-FTA nations.
Japan is the world’s largest importer of natural gas, followed by South Korea. Last month, Tokyo Electric Power Co. announced its first-ever long-term contract for LNG at prices indexed to the Henry Hub (see Daily GPI, Feb. 8). Japan and other Asian buyers of LNG have traditionally paid prices indexed to oil, which in current market conditions are much higher than natural gas-linked prices.
Qatar had been the largest supplier of LNG to Japan. However, according to Australia-based EnergyQuest, Australia last year surpassed Qatar as the largest exporter of LNG to Japan (see Daily GPI, March 11). Australia exported 15.9 million tonnes (mt) of LNG to Japan last year, overtaking Qatar, which exported 15.7 mt, and Malaysia, which exported 14.6 mt to Japan, the firm said. The start-up of the Pluto LNG project in 2012 (see Daily GPI, March 23, 2012) propelled Australia into top position among LNG exporters to Japan.
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