The government of Japan has asked the United States to OK the export of liquefied natural gas (LNG) so that it might benefit from greater gas supply security, according to a report in The Daily Yomiuri, which cited unnamed sources.
Japan is seeking energy supplies to make up for the output from nuclear reactors shuttered following its tsunami and meltdown disaster last year (see Daily GPI, March 15, 2011). Additionally, Japan is seen as the most vulnerable to any blockage of the Strait of Hormuz that could arise from escalating tensions between Iran and the West (see Daily GPI, Jan. 10).
At the request of U.S. ally Japan, the two governments have begun talks so Prime Minister Yoshihiko Noda and President Barack Obama can reach an agreement on exporting LNG during Noda’s scheduled visit to the United States this spring, according to the newspaper. According to the Yomiuri report, published online Thursday, the Japanese government is asking the U.S. to permit export of LNG produced by planned projects at existing LNG terminals in Louisiana and Maryland.
Dominion Resources continues to move forward with its plan to export LNG from its Cove Point terminal in Lusby, MD, which is situated on the Chesapeake Bay (see Daily GPI, Oct. 12, 2011). The plan to export up to 1 Bcf/d of domestic gas over a 25-year period to any country that has, or in the future develops, the capacity to import LNG via tanker, or that has — or in the future enters into — an FTA with the United States, was approved by the U.S. Department of Energy last fall (see Daily GPI, Feb. 9).
Multiple U.S. LNG export projects have received DOE clearance to export to countries that are party to a free trade agreement (FTA) with the United States; however, Japan is not such a country (see Daily GPI, Jan. 23; Dec. 9, 2011). Recently, Energy Secretary Stephen Chu said his department would hold off on granting authorizations to export to non-FTA countries until after the potential impact of exports on domestic gas markets has been analyzed (see Daily GPI, Feb. 17).
Exports of LNG would have a negligible impact on domestic gas supply and prices, according to a position paper released by the Interstate Natural Gas Association of America (see Daily GPI, Feb. 23). However, gas consumers have sounded alarm bells about the potential impact on domestic prices, and a recent Energy Information Administration analysis found that imports would lift prices (see Daily GPI, Jan. 20).
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