FOCUS: Japan, U.S. to Jointly Develop LNG Markets in Asia

November 15, 2018

Tokyo--The Japanese and U.S. governments will jointly embark on the development of liquefied natural gas markets in Asia, as they share interest in boosting LNG demand in the region.

Demand for LNG is expected to exceed supply around 2022 or 2023, as it is cleaner than coal and other energy sources.

Japan, the world's largest importer of LNG, provides assistance to build LNG-receiving facilities in other parts of Asia, while the United States hopes to export LNG produced at shale gas plants to the region.

Japan's Ministry of Economy, Trade and Industry will boost financial assistance from state entities to Japanese firms and cooperate with the United States to help other Asian countries devise LNG-related plans and systems.

In a joint statement released Tuesday after a meeting between Japanese Prime Minister Shinzo Abe and U.S. Vice President Mike Pence, the two countries confirmed cooperation in energy-sector development.

The ministry will make financial assistance from state entities available to Japanese companies without interests in upstream LNG projects for exploration, development and production.

Specifically, such companies will be allowed to apply for investments by government-affiliated Japan Oil, Gas and Metals National Corp., or JOGMEC. The ministry hopes to encourage the companies to participate in gas liquefaction projects.

Low-interest loans from Nippon Export and Investment Insurance and the Japan Bank for International Cooperation have been provided to LNG projects on condition that the gas is exported to Japan.

Now, the coverage of their loans on preferential terms will expand to newly include the construction of LNG-receiving facilities if Japanese companies are involved in gas liquefaction.

The ministry will also help Asian countries draw up master plans and create systems in the fields of technology and safety.

Japan's Association for Overseas Technical Cooperation and Sustainable Partnerships held a joint training course attended by experts from the United States when the association accepted trainees from other Asian countries in October.

U.S. experts are also slated to attend a training course to be held by JOGMEC next month. The ministry will also consider sending experts to Asian countries depending on demand from such countries.

In Asia, China is increasingly boosting LNG imports for use as fuel for heating. Thailand, Pakistan and Bangladesh have become LNG importers.

Meanwhile, producer countries are said to be struggling to size up potential demand in the region.

Japan will strengthen support for Asian countries in financing and human resources, hoping to establish demand in Asia, a ministry official said.

It is difficult for Japan to meet U.S. demand for LNG import expansion, as LNG demand is unlikely to grow markedly amid a decline in the population.

But if the two countries jointly develop LNG markets in Asia, there will be "a win-win situation for all three parties," the official said, adding that Japan would be able to dodge U.S. pressure.

The ministry also plans to strengthen security related to LNG.

Usually, Japan holds LNG stocks equivalent to 20 days of consumption. The ministry will try to create a system for mutual supply of LNG among Asian countries in preparation for future emergency situations.

The ministry hopes to promote the launch of new LNG projects in order to help create new LNG demand totaling 50 million tons in Asia through Japanese assistance. Jiji Press