Huh, development costs do matter.
Maybe IOC's negative conditioned gas cost may attract accretive bids after-all.
Spot market, futures trading. This allows is rapid development of all PNG fields and they will not be tied to LT sales contracts prior to sanctioning. JP, if they bid right, may be able to sell excess LNG to their neighbor's. The new LNG paradigm.
**********
Japan Public, Private Sectors Agree to Create LNG Futures
March 29, 2013, 10:33 a.m. ET
By MARI IWATA
Japan's public and private sectors Friday agreed to create liquefied natural gas futures listed on a public bourse by March 2015, to establish a price benchmark for LNG.
LNG prices are currently linked to those of crude oil, which many Japanese users say don't always reflect LNG supply-demand conditions.
The agreeing parties will seek to list U.S. dollar-denominated LNG futures on the Tokyo Commodity Exchange, and invite participation from investors and buyers across Asia. They will be open to cooperation with countries working on similar plans such as Singapore.
The parties include electricity and gas utilities, trading houses, futures traders and energy developers, as well as the Ministry of Economy, Trade and Industry.
The parties will work toward details, such as specifications of LNG, that would receive wide acceptance, said METI Commerce Director Takashi Ishizaki, who oversees futures trading regulations.
Crude-linked contracts have sent the price of Japan-imported LNG to about $18 per million British thermal units, compared with $3.00/mmbtu for the fuel in gaseous form out of Henry Hub in Louisiana, the U.S. gas benchmark.
Most Japanese utilities have reported net losses so far in the fiscal year that began April 1, citing high fossil-fuel costs.
Japanese demand for LNG has surged since the March 2011 Fukushima accident, which put several nuclear reactors offline and by May 2012 sidelined Japan's entire fleet, as power companies kept them idle after maintenance shutdowns due to public safety concern. Two reactors have since been brought back online.
The government and utilities companies have been lobbying major LNG producers to move away from the Japan crude cocktail benchmark and adopt new formulas, including Henry Hub-linked pricing.