While the plan is just now being rolled out, Japan hopes to nail it down “relatively quickly” so it can start importing Canadian LNG by 2020.
Japan found itself short of energy after the earthquake and nuclear disaster two years ago caused the country to back away from nuclear power because of safety concerns.
Mr. Maeda said only two of Japan’s 50 nuclear plants are still in operation. The energy gap has been filled by stringent energy conservation and a large increase in LNG imports.
But that’s resulted in a huge energy price tag because Asian LNG prices are linked to oil prices, making them expensive relative to North American natural gas prices, which have been depressed since the discovery of large shale deposits.
Japan is now trying to ramp up an integrated natural gas industry based on North American gas prices that involves securing supplies in North America, building infrastructure and marketing gas to customers.
Mr. Maeda was one of dozens of industry, government and thought leaders from Asia and North America meeting in Canada for the first time to build an integrated energy industry linking North American energy supplies and Asian markets, where energy demand is increasing. China, Japan and Korea have been dependent on imports from the Middle East and Russia and are keen to forge energy relationships with Canada and the United States that also offer new energy technology and market-based prices.
The Japanese government is [prepared to make] a strategic investment for the purpose of developing a commodity market for natural gas
Mr. Maeda said Japan is also looking at importing gas from the United States, but is keener to forge an energy partnership with Canada.
LNG transportation costs from Canada’s West Coast are lower because of its proximity to Asia and Japan believes LNG exports are more likely to move ahead from Canada than from the West Coast of the United States.
The Japanese government’s planned investment in Canada could take many forms, Mr. Maeda said. It could involve a consortium of Japanese energy companies benefitting from government loan guarantees or it could involve direct government investment. It could also mean financing for standalone pipelines and liquefaction plants that are not backed by supplies of natural gas.
Japanese companies are already participating in the nascent LNG industry in Western Canada. Six LNG export terminals are being planned for the northern British Columbia Coast. Japan’s Mitsubishi is a partner in the LNG Canada project led by Royal Dutch Shell PLC. Japan’s Inpex is a partner in a project planned by China’s CNOOC Ltd., which last year acquired Nexen Inc.
But the Japanese government wants to play a direct role because Japanese companies’ interests are not always aligned with those of the government, he said. For example, companies are free to sell the LNG to many markets, while Japan wants to be able to count on as much Canadian supplies as possible.
The LNG strategy is separate from Thursday’s stimulus announcement by the Bank of Japan, Mr. Maeda said.
Japan is not worried that direct government investment will trigger a backlash in Canada similar to that stirred by the takeover of oil and gas producer Nexen by CNOOC because it doesn’t involve state-owned enterprises, he said.