Japan Pays Dearly for U.S. Shale Cargoes

Japan in January paid nearly twice as much for liquefied natural gas (LNGLF) (LNG) derived from U.S. shale gas as it did for its cheapest imports, official trade data showed on Friday.

Shale gas from the United States had been touted as a panacea to Japan's energy crisis after the Fukushima nuclear disaster nearly six years ago. The first supplies arrived in Japan last month to much fanfare but the revelation of its higher cost would seem to undermine the initial euphoria.

Japan, the world's biggest importer of LNG, received 211,237 tonnes of U.S. LNG at an average cost of $645 a tonne, according to a breakdown of customs-cleared imports released by the Ministry of Finance.

By contrast, the lowest it paid was $337 a tonne for 64,246 tonnes of LNG from Angola.

The country paid an average of $386 a tonne for all 8.3 million tonnes of LNG it imported last month, the data showed.

The 428,626 tonnes of LNG imported from Brunei, at $416 per tonne, were the second highest-priced supplies.

Australia was Japan's biggest supplier in January, sending 2.01 million tonnes at a cost of $384 a tonne.

The prices are for landed cargoes, including shipping, and based on the ministry's official exchange rate for the month.

The U.S. supplies came from Cheniere Energy Inc's Sabine Pass LNG Terminal in Louisiana, the first of several export facilities being built to capitalize on the surge of shale gas supply extracted through new drilling techniques in the past decade.

After the March 2011 Fukushima nuclear disaster led to the shutdown of the country's reactors, Japan's utilities imported record amounts of LNG and other fossil fuels. The companies later signed up to buy millions of tonnes a year of U.S. LNG.

They were encouraged by the Japanese government, which was alarmed at the high cost of imports and attracted to cheap U.S. gas prices.

JERA Co, a joint venture between Tokyo Electric Power and Chubu Electric Power and the world's biggest individual buyer of LNG, announced in January it imported Japan's first shale gas cargoes.

The company took in two cargoes, totalling about 140,000 tonnes, with one for Tokyo Electric and the other for Chubu Electric, a JERA spokesman said by phone on Friday.

"For diversification, it is important to have various price benchmarks, so we will continue to have a certain share of LNG that is linked to U.S. price benchmarks," he said.

A third cargo arrived in a port in western Japan, according to the trade data, suggesting it was destined for Kansai Electric Power Co.

Kansai Electric declined to immediately comment when contacted by Reuters.

Reporting by Aaron Sheldrick