The US shale boom, as Polemarchus might have said, is helping friends and harming enemies. Shale gas from America has become an important asset for Japan’s economic recovery; the country is an ally poor in natural resources and struggling with soaring fuel costs in the wake of the Fukushima nuclear disaster. Liquefied natural gas (LNG) imports from the US will not only be cheap for Japan, but can act as a bargaining chip that will allow it to negotiate lower fuel prices with existing suppliers, such as Russia. The Japan Times reports:
Japan, which can only import natural gas in liquefied form, has been purchasing the most expensive LNG in the world under long-term contracts linked to crude oil prices, which remain high. […]
“I welcome from the bottom of my heart the U.S. approval of LNG exports,” trade minister Toshimitsu Motegi said Saturday. […]
“Theoretically, we may be able to import LNG at two-thirds of the price paid now if we can buy shale gas,” an official of the Natural Resources and Energy Agency told a gathering of ruling party lawmakers last month.
Russia has been hit with a dwindling share in the European LNG market and is turning to Asia for alternatives. But it faces a significant battle with the US, whose shale boom can give Asian countries like Japan a much cheaper import option that puts Russia, who wants to keep prices high, in a tough spot.
Japanese experts have been quick to quell enthusiasm for American shale gas, noting that costs may not decrease all that much and that a shale fetish still wouldn’t address Japan’s long-term energy concerns. But the US has already approved three major projects that will amount to 20 percent of Japan’s yearly import, and Japanese officials are clearly excited.
The US shale boom continues to make life easier for America both at home and abroad.
[Oil rig image courtesy of Shutterstock]