Pacific trade deal or no, Japan eyes US gas riches

The Trans-Pacific Partnership trade deal could accelerate and expand energy US-Japan energy trade as Japan looks to fill a gap left by a nuclear power ban.

But with or without TPP, analysts say Japan is poised to buy a lot of US natural gas.The world’s fourth-largest energy consumer has been on the lookout for new supplies. Ever since 2011’s Fukushima disaster, Japan has run its economy without nuclear power, which once provided more than a quarter of its electricity.

The resource-poor island nation has filled the gap mostly with costly imported coal and natural gas, while also expanding deployment of renewable power. Now, Japan is looking across the Pacific Ocean toward an ally awash in new energy supplies.

 Japanese firms already buy millions of cubic feet of natural gas from the US. That energy dynamic could accelerate and expand if a trans-Pacific trade deal under debate in Congress this week gets a go-ahead.It’s one reason Japan joined the Trans-Pacific Partnership, a wide-ranging trade agreement between 12 nations, back in 2013.

TPP would give Japan and other countries a more favorable status when it comes to getting the approvals companies need to ship liquefied natural gas (LNG) overseas.Still, TPP’s impact on US-Japan energy trade might not be as large as it seems – at least not in the short term.

Analysts say that depressed global gas prices combined with Japan’s preexisting contractual obligations, could limit the trade deal’s impact on global LNG flows.

 “Passage of the TPP would not have a significant impact on our LNG trade with Japan,” says Tom Cutler, president of Cutler International, a consulting firm. “I’m sure it will have important implications in other parts of our trading relationship but in terms of LNG I think [Japan] feel[s] they’ve already got what they need.”

 US law requires energy firms to get special permission to export natural gas to countries, like Japan, that do not have a free trade agreement with the US. That hasn’t stopped Japan from claiming a stake in the supplies those projects will one day ship.

 Of the four US LNG projects that have received final approval to export the fuel, Japanese companies have signed on to two directly, and one indirectly, according to a January Congressional Research Service report.

csmonitor.com