[KITAKYUSHU, Japan] Japan aims to become an international trading hub for liquefied natural gas (LNG) by the early 2020s, the world's biggest importer of the fuel announced on Monday as part of a message delivered to the energy ministers of G7 industrial nations.
In an attempt to play a role in creating a global LNG market, Japan will open access to receiving terminal and beef up large-scale LNG storage facilities to make active LNG trading possible, the country's trade ministry said.
Japan's trade ministry made the announcement at a meeting of energy ministers from G7 countries - Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States. The two days of meeting in Kitakyushu in southwestern Japan included representatives from the European Union, International Energy Agency and International Renewable Energy Agency.
Global LNG buyers, including in the two biggest, Japan and South Korea, have long said the LNG market needs to be more flexible in terms of breaking the pricing link to crude oil benchmarks and in doing away with the single destination clauses that are part of most long-term supply contracts.
Japan, which buys about a third of global LNG shipments, is trying to cut fuel costs and gain more control over prices after the shutdown of the country's nuclear plants in the wake of the 2011 Fukushima disaster pushed demand for gas to record levels.
In a joint statement at the end of the meeting, the G7 ministers said they supported moves in the direction of creating LNG trading hubs to improve market transparency and liquidity.
"Relaxing destination clauses in LNG contracts, encouraging market development of price indices reflecting LNG supply and demand, and continued dialogue among stakeholders are crucial to achieve this," the joint statement said.
Japan's Tokyo Commodity Exchange in 2014 opened an over-the-counter LNG trading system.
Japan and the CME Group last year also said they would join forces to develop a Japan-based LNG contract to help break the decades-long reliance on oil-link pricing, foster spot trade and establish a benchmark answerable to regional fundamentals.