Chubu Electric Power, a utility company serving central Japan, will begin importing cheaper natural gas from the US in 2016, one year ahead of schedule, to bring down high fuel costs and improve its bargaining position with other suppliers, a major business daily here reported Tuesday.
Beginning shale gas procurement early will affect crude oil price fixing, the Nikkei Shimbun said, adding this is expected to hold down prices for more expensive fuel from such regions as the Middle East.
Chubu Electric has signed a contract with American shale gas developer Cheniere Energy to procure a total of 700,000 tons of liquefied natural gas (LNG) between July 2016 and January 2018 from the US state of Texas.
LNG made from shale gas costs 20-30 percent less than LNG produced in the Middle East or Southeast Asia.
Kansai Electric Power in western Japan also agreed in June to import 400,000 tons of LNG a year from Texas, starting in the first half of 2016. Japanese trading houses and other companies have planned to start imports from 2017.
Buyers of US-produced LNG have a great deal of freedom, with no regulations preventing them from reselling their surplus, which will be a useful card to play in price negotiations with powerful sellers, the newspaper said.
For Chubu Electric and Kansai Electric, these contracts will account for only 3-5 percent of their annual needs.
Still, they are moving up their plans in a bid to cut fuel procurement costs for fossil fuel plants, since prospects are poor for restarting their idled nuclear facilities soon.
Japan's 48 usable reactors remain offline due to safety concerns after the Fukushima Daiichi meltdowns of 2011.