Japan pays high fee for first U.S. shale cargo

TOKYO —

Japan in January paid nearly twice as much for liquefied natural gas (LNG) derived from U.S. shale gas as it did for its cheapest imports, official trade data showed on Friday.

Shale gas from the United States had been touted as a panacea to Japan’s energy crisis after the Fukushima nuclear disaster nearly six years ago. The first supplies arrived in Japan last month to much fanfare but the revelation of its higher cost would seem to undermine the initial euphoria.

Japan, the world’s biggest importer of LNG, received 211,237 tons of U.S. LNG at an average cost of $645 a ton, according to a breakdown of customs-cleared imports released by the Ministry of Finance.

By contrast, the lowest it paid was $337 a ton for 64,246 tons of LNG from Angola.

The country paid an average of $386 a ton for all 8.3 million tons of LNG it imported last month, the data showed.

The 428,626 tons of LNG imported from Brunei, at $416 per ton, were the second highest-priced supplies.

Australia was Japan’s biggest supplier in January, sending 2.01 million tons at a cost of $384 a ton.

The prices are for landed cargoes, including shipping, and based on the ministry’s official exchange rate for the month.

The U.S. supplies came from Cheniere Energy Inc’s Sabine Pass LNG Terminal in Louisiana, the first of several export facilities being built to capitalize on the surge of shale gas supply extracted through new drilling techniques in the past decade.

After the March 2011 Fukushima nuclear disaster led to the shutdown of the country’s reactors, Japan’s utilities imported record amounts of LNG and other fossil fuels. The companies later signed up to buy millions of tons a year of U.S. LNG.

They were encouraged by the Japanese government, which was alarmed at the high cost of imports and attracted to cheap U.S. gas prices.

JERA Co, a joint venture between Tokyo Electric Power and Chubu Electric Power and the world’s biggest individual buyer of LNG, announced in January it imported Japan’s first shale gas cargoes.

The company took in two cargoes, totalling about 140,000 tons, with one for Tokyo Electric and the other for Chubu Electric, a JERA spokesman said by phone on Friday.

“For diversification, it is important to have various price benchmarks, so we will continue to have a certain share of LNG that is linked to U.S. price benchmarks,” he said.

A third cargo arrived in a port in western Japan, according to the trade data, suggesting it was destined for Kansai Electric Power Co.

(c) Copyright Thomson Reuters 2017.

  • 11

    kurisupisu

    Meanwhile wind and solar have been steadily abandoned by this government-Japan's energy policy is a complete farce!

  • -1

    badsey3

  • -5

    proxy

    I commend the government of its policy of cheap reliable energy. Gas is cheap and having various sources makes it reliable. The Japanese environment has been severely damaged by solar farms, where there once was life there is not sterile gravel or concrete.

  • -3

    MsDelicious

    Go Nuclear. Cleaner and safer.

  • 5

    GW

    Don't be so quick to neg proxy, here in north Chiba forests have been destroyed & flattened to make solar farms, not good!

    I have no problem taking down old building & house to put in solar, but forests...... that's messed up but it can & does happen

  • -1

    gokai_wo_maneku

    @GW Yes, they do realize that forests produce the oxygen that we breath, don't they? About the price, if this helps narrow the trade balance with the US, Trump will shut up about it.

  • 6

    minello7

    Here is a good example of governmental housekeeping, paying almost double the price for a product. Shows a good example to all the Japanese housewives who don't have the luxury of choice when shopping with their budget. The US is having a laugh at the expense of the Japanese.

  • -5

    proxy

  • 1

    Robert pearce

    Japan has been spoiled by Australian government by giving away our gas at a cheaper price than what we pay for it in Australia.

  • 0

    Ron Barnes

    Yes Robert i totally agree but all the profits are going overseas and our stupid Australian government dont charge them Tax only us mere mortals pay tax . So gas is cheap world wide from Australia because we pay top price to support the export exploitation of Australia. Japan Why buy gas from Countries that are very far from Japan Buy local and less transport costs.

  • 0

    Paul_Barbara

    @ minello7Feb. 25, 2017 - 11:17AM JST '...The US is having a laugh at the expense of the Japanese.'

    Don't they always, and with everyone else too?

  • 1

    Thomas Crane

    the price is far too high ! do not be exploited ! M

  • 1

    badsey3

    Sakalin 2 has production capacity of 10 million tons LNG a year and is also closer than all listed suppliers.

  • 0

    minello7

    badsly3- ssshhhh, somebody in the Japanese government might notice, or maybe its just pride, or, the US told them not to do business with Russia.http://www.shell.com/about-us/major-projects/sakhalin.html

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