- POSTED: 10 Sep 2013 22:47
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Japan called on Tuesday for a reduction in the price of liquefied natural gas and a rebalancing of the global market.
TOKYO: Japan called on Tuesday for a reduction in the price of liquefied natural gas and a re-balancing of the global market.
At an LNG producer-consumer conference in Tokyo, the world's largest importer of the fuel, industry minister Toshimitsu Motegi complained about a so-called "Asian premium".
"There is strong concern among the public over the surging demand and soaring prices for LNG," Motegi said in his keynote speech at an event bringing together more than 1,000 officials and business people from about 50 economies.
"Increases in fuel procurement costs impose a heavy burden on the Japanese economy," he added.
Japan and some of its fellow Asian neighbours have long paid more for LNG than nations in Europe and in North America.
The LNG price for Japan stands currently at about US$16.3 per million BTU (British thermal unit), against US$3.8 per million BTU in the US, Motegi said.
That is because the region's contracts are often long-term and linked to oil prices, Japanese officials say.
The trend has remained despite increasing global production of LNG, particularly in light of the US shale gas revolution, Japanese officials said.
The high energy cost squeezes the bottom line of Japan Inc, Motegi said, exacerbating the trend of companies moving abroad.
Hefty prices for LNG have also hit Japanese utilities, which are now nearly entirely without working nuclear reactors because of a public backlash in the aftermath of the Fukushima disaster.
LNG-powered thermal plants used to provide about a third of Japan's electricity before the 2011 tsunami-sparked atomic crisis.
Now they account for about a half of Japan's electricity needs, while nuclear power, which used to provide a third of the nation's power needs, has shrunk to just three per cent.
Tokyo Electric Power, operator of the crippled Fukushima plant, said nearly half of its total costs are from fuel.
Naomi Hirose, TEPCO president, complained that his firm enjoys no price advantage even though it is a high volume LNG buyer.
"I don't understand this phenomenon," he told the conference.
Hirose added that the vast utility was diversifying its energy sources in order to reduce costs.
But officials from gas-producing nations said Japan and other energy importers needed to shoulder some of the high costs of LNG production.
Mohammed Bin Saleh Al-Sada, minister of energy and industry in Qatar, said LNG required large investments and long-term consumer commitment.