Japan Seeking Better Access to U.S. LNG

Japan is a major importer of LNG

Japan is seeking to join the Trans-Pacific Partnership Trade Agreement in a deal that could give it access to imports of liquefied natural gas (LNG) from the U.S., Bloomberg reports.

Prices of imported LNG in the Asian nation average almost $16.70 per million British thermal units (Btu), while U.S. natural gas futures trade in New York for about $2.83 per million Btu, making the market attractive for companies developing natural gas resources in the U.S.

A free-trade agreement could exempt exporters moving LNG to Japan from a U.S. Energy Department review process to determine whether sales are in the public interest.

Some U.S. environmental groups argue that allowing freer exports of the fuel to Japan would have negative consequences.

"We'll be paying the price here, with more fracking in our backyards, near our schools, and next to our hospitals - only to help a handful of big gas companies profit by shipping natural gas overseas," said Ilana Solomon, trade representative for environmental group the Sierra Club.

The trade agreement currently being drafted encompasses 11 nations in Asia and the Americas.

Japan's reliance on natural gas jumped after it moved away from nuclear power in the wake of the Fukushima nuclear power disaster in 2011, while the U.S. is producing increasing amounts of the fuel with new shale-gas production operations.

Research and consulting firm Wood Mackenzie recently predicted that Japanese demand would help drive increasing use of LNG in Asia, and Canadian LNG producers are also targeting the country for exports of the fuel.