Abstract
This study proposes a new idea for liquefied natural gas (LNG) trade based on Japan’s natural gas market. As part of their high rate of economic growth in recent decades, many Asian countries, including Japan, have constructed natural gas supply chains that are characterized by natural monopolies and vertically integrated companies. In addition, although Japan has a 50-year history of LNG imports, its domestic natural gas distribution mechanisms are not designed to create connections among markets. Therefore, domestic spot and futures markets have never operated efficiently. To promote Japanese domestic market competition, this study proposes a “tanker-based trading system” involving LNG tankers owned by a consortium of Japanese firms and supported by the Japanese government. This trading system would enhance the market efficiency of LNG-based operating countries. Thus, a spot market for natural gas in Japan and East Asia can be created using LNG tankers, and the natural gas trading system in Japan can play a role in spot markets similar to the Henry Hub and the National Balancing Point. DOWNLOAD HISTORY | This article has been downloaded 143 times in Digital Commons before migrating into this platform.
Highlights
This study proposes a new idea for liquefied natural gas (LNG) spot trades involving Japan’s natural gas market
When LNG trade is possible, exporters can send their product to any location with a gasification plant, while importers can receive their gas from any location with a liquefaction plant [1]
This study proposes a new approach to creating LNG spot markets in Japan
Summary
This study proposes a new idea for liquefied natural gas (LNG) spot trades involving Japan’s natural gas market. In discussing the natural gas market in Asian countries including Japan, we need to consider that a large volume of natural gas is imported as LNG, and these Asian countries have not yet fully completed their transmission pipeline networks. These countries are located far from primary gas mines, and tend to purchase LNG that is transported by LNG tankers because of their poor pipeline networks. Japan’s pipeline networks radiate outward from the LNG terminals in the major ports This is in contrast to the United States, where natural gas pipelines are designed to transport gas from production fields to consumers located thousands of miles away.
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