It is well known now that ever since Japan decided to shut down its nuclear power plants in the wake of the Fukushima disaster, it has had to increase LNG imports and has seen its energy bill rise massively. In January the Finance Minister announced that Japans trade deficit had reached a record ¥1.6 trillion ($17.5 billion).
As Prime Minister Shinzo Abe meets with President Barack Obama in Washington this week he will take the opportunity to ask the President to allow shale gas exports in the hope that his country will be able to take advantage of the incredibly low priced gas produced by the US shale boom.
Mark Lewis, an analyst at Deutche Bank AG, stated that, "since Fukushima, Japan has dramatically increased its energy imports. They are desperately looking for cheaper imported sources of energy supply."
Related article: Loss Making Investments in Natural Gas Markets Act as Subsidies
Abe will request that Obama share the benefit of the US shale boom which has sent natural gas prices falling to just a fifth of those in Asia. If an agreement is made then the world's third largest economy could find the means to vastly reduce its energy bill, which has grown as LNG imports increased by 11% last year alone.
According to the Japanese Ministry of Finance, in December they paid around $15.79 per million British thermal units (Btus)of gas, whereas the US gas futures traded at less than $2 per million Btus.
Some politicians in the US are opposed to allowing domestically produced natural gas and LNG to be exported, claiming that it will cause energy prices for consumers and manufacturers to increase. Actually, a study conducted by NERA Economic Consulting on behalf of the Department of Energy found that exporting LNG would grant net economic benefits to the US.
By. Charles Kennedy of Oilprice.com
Charles is a writer for Oilprice.com More