Japan offers US$10bn to support Asian LNG infrastructure
Friday, Oct 20, 2017
Japan this week announced that it would make US$10 billion available for investment in government and private joint initiatives to support the expansion of the LNG industry throughout Asia.

Japan has been working in recent months to promote the use of LNG and liberalise the market, and also to eliminate destination clauses in suppliers’ contracts.

Through the investment initiative, Japan hopes to boost demand in Asia, which already accounts for 70% of global consumption. Japan is itself the world’s largest consumer of LNG.

Speaking at the annual LNG Producer-Consumer Conference in Tokyo on October 11, Japanese Minister of Economy, Trade and Industry (METI) Hiroshige Seko said the money would go towards upstream, midstream and downstream projects in the LNG industry.

“Japan will continue to work towards developing liquid LNG markets in Asia, seek specific actions creating LNG demand by new LNG utilisation measures such as LNG bunkering, and contribute to building international consensus on the benefits of LNG,” Seko said.

Seko encouraged Asian leaders to consider seriously the expanded use of natural gas, which he called a smart energy, and he called on LNG producers to “improve the attractiveness of LNG, including more rational and flexible trade conditions.”

Japan’s Fair Trade Commission earlier this year ruled to ban clauses in LNG supply contracts that prevent customers from reselling LNG, saying they are anti-competitive.

The commission said in July that Japanese consumers anticipated excess supplies in LNG as more fuel from the US, Australia and Africa becomes available.

Surplus LNG with Japanese companies could be resold to new markets developed through the METI initiative. While demand in Asia exists, the area suffers from a lack of terminals and power generation facilities that could burn natural gas.

The US, which anticipates significant growth in LNG exporters in the coming years, has been encouraging the growth of LNG markets in Asia and has applauded Seko’s statements.

Meanwhile, Japan and India signed a co-operation agreement during the conference calling for the establishment of a liquid, flexible and global LNG market.

India is the fourth largest importer of LNG and the proposals made by Japan for loosening the market appeal to it as well. Seko and Indian Petroleum Minister Dharmendra Pradhan signed the memorandum.

The agreement “provides a framework to co-operate in facilitating flexibility in LNG contracts, the abolition of destination restriction clauses and also explores possibilities of co-operation in establishing reliable LNG spot price indices reflecting true LNG demand and supply,” an Indian government statement said.

This NewsBase commentary is from our GLNG publication. To sign up for your free trial, click this link: http://newsbase.com/publications/glng-global-lng

Read more NewsBase top stories via this link: http://bit.ly/2h95NUx
Find out more about Asian Oil and Gas from NewsBase