By Amanda Battersby
17 April 2013 18:46 GMT
"Japan must reduce its LNG costs,” he told the LNG 17 conference in Houston.
The Japanese public seem to believe that the utilities do not strive hard enough to source reasonably priced volumes, said Hashimoto, adding that it has often been said, even by ‘energy experts’ that Japanese utilities will pay any price for LNG, no matter how high, to ensure security of supply.
He sought to dispel that industry myth, telling delegates that Japan’s LNG customers are today suffering.
The combination of high LNG prices and the increased imports following the March 2011 Fukushima disaster means Japan is paying around $40 billion annually for LNG – an amount that the nation simply cannot afford.
The recent move by Bank of Japan to effectively print more money caused the yen to slide putting even more pressure on Japanese importers which pay for their LNG cargoes in US dollars.
“I think, depending on the magnitude of the liquidation of the currency, the impact will be huge” on LNG importers pockets, said Hashimoto of the BOJ’s recent move that caused the yen to weaken towards 100 to the greenback.
Japanese customers already pay around three times as much for their electricity as in neighbouring China even though Japan’s utilities are not able to pass on all of the increased costs to end-users.
The crippling high cost of importing LNG means that job losses are being considered at some utilities and some are also faced with having to divest assets, the Institute’s Nobuo Tanaka told Upstream.
The high LNG import bill post-Fukushima helped push Japan into a trade deficit in 2011 and 2012 and could erode the nation’s current account surplus, said Tanaka.