Japan Pays Record Price for LNG Imports in April as Yen Weakens

Japan paid a record for liquefied natural gas in April as a government pledge to boost monetary stimulus weakened the nation’s currency, increasing the price of imports of the fuel.

The world’s largest buyer of LNG paid 82,477 yen ($816) a metric ton for the fuel last month, according to Bloomberg calculations based on Finance Ministry data released yesterday. That’s higher than the previous record of 81,089 yen in September 2008 and a 2.8 percent increase from March.

Japan’s nine biggest regional power utilities cited increased fuel costs when they reported combined losses of 1.59 trillion yen in the year ended March 31. The currency traded at an average of 97.76 yen against the dollar in April, compared with 83.91 yen in December, when Prime Minister Shinzo Abe came to power promising increased Bank of Japan monetary easing.

“Electric utilities are importing a lot of LNG,” said Osamu Fujisawa, an independent energy economist in Tokyo who has worked for Saudi Arabian Oil Co. and Showa Shell Sekiyu K.K., an oil refiner. “In the end, they’ll pass those costs along and the consumer will have to bear it.”

Japan imported a record 86.9 million tons of LNG in the 12 months ended March 2013, as most of the country’s nuclear reactors remained shut because of safety concerns after the March 2011 disaster at the Fukushima Dai-Ichi atomic station.

Kansai Electric Power Co.’s No. 3 and No. 4 units at its Ohi plant are the only operational facilities among the nation’s 50 atomic reactors. Utilities have to meet the Nuclear Regulation Authority’s new safety standards, to be drawn up by July, before they can restart idled facilities.

U.S. Request

Abe planned to ask President Barack Obama to allow gas exports to Japan when they met in Washington in February, according to Japanese officials who asked not to be identified. A shale-gas production boom in the U.S. has driven prices below those in much of Asia and Europe,

Japan’s trade ministry plans to establish a futures contract for trading the fuel, Takashi Ishizaki, the director of the ministry’s commerce policy division, said March 29. The futures will allow consumers and producers to hedge against price swings, while challenging the current method of linking LNG’s cost to oil.

To contact the reporter on this story: Jacob Adelman in Tokyo at jadelman1@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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