Resource-hungry Japan called Wednesday for a revamp of the world's LNG market, as it ramps up its hunt for new sources of energy for a country badly scarred by the Fukushima disaster.
Industry minister Yukio Edano said Liquefied Natural Gas was set to be a huge growth sector over the coming years, and the regionally stratified market for it produced huge price disparities.
He said Japan's move away from nuclear power since the tsunami smashed into Fukushima Daiichi, as reactors have gone offline amid safety fears among a nervous public, had meant an increase in demand for other forms of energy.
"Japan's LNG imports have rapidly grown since last year's nuclear accident, shooting up from 70 million tons in 2010 to about 90 million tons expected in 2012," Edano told a conference of producers and consumers in Tokyo.
"For Japan, how to procure cheap LNG is a significant challenge to address both for the public and private sectors."
LNG is gas that is temporarily liquefied for easier storage and transportation.
Edano said the present pricing structures on LNG markets meant in Asia, where its price is index-linked to oil, buyers were paying far more than those in North America, where price is determined on the basis of supply and demand.
"As one means to secure stable procurement of LNG, the government will start studying this fall the creation of an LNG futures market," he told the conference, a gathering of 500 participants from about 30 nations.
He said with more projects coming online all the time as improvements in technologies like fracking make gas cheaper to extract, supply was set to rise.
But the demand for this relatively cheap and comparatively clean form of energy would also increase.
"LNG demand and supply will both grow dramatically in the next decade, so the LNG markets will greatly change," he said.
The United States has increased its production of shale gas, a natural gas trapped in flakes of sedimentary rock, which has pushed down the price for natural gas in North America and is boosting interest around the world.
Japan, which has few natural resources of its own, and South Korea are the world's top LNG importers, accounting for nearly half of all imports.
The Japanese government last week announced its intention to wean the country off nuclear power by 2040, a form of energy that used to provide a third of the country's electricity.
The government is facing a likely election later this year and atomic power has become a hot button issue, with regular demonstrations calling for it to be scrapped following the worst nuclear disaster in a generation.
