December 19, 2013 12:00 am JST

Japanese companies on LNG fence

NATSUKI KANEKO, Nikkei staff writer

TOKYO -- Energy companies in Asia are working on joint purchases of liquefied natural gas as crude oil prices hover at high levels. For Japan, however, the private sector is hesitating, even as its government charges ahead with the idea.

      The Japanese government has made the joint procurement of natural gas a priority. In September, energy research institutes from Japan, other Asian nations and Europe set up a study group to discuss the issue. The Japanese government, by encouraging joint purchases by Japanese and other Asian companies, seeks to enhance the bargaining power of gas buyers when negotiating with gas-producing countries. Tokyo also plans to provide generous debt guarantees for Japanese companies acquiring gas concessions.

     A few Japanese companies have already gone ahead with LNG joint purchases. Chubu Electric Power, for instance, has decided to procure the gas jointly with Korea Gas of South Korea. But most Japanese companies are still cautious. Purchase officials of power and gas suppliers have said that while it is necessary to expand the scale of gas purchases, it will take time to launch joint procurement actions.

Simply not there

On Dec. 5, purchase officials of major resources companies in China, South Korea, Taiwan and other Asian nations met in New Delhi on the invitation of GAIL (India), India's state-run gas utility. The low-key event was the second meeting of the Asia LNG Market Forum. Participating companies appear to have discussed ways to cooperate with one another, including joint purchases, on top of having exchanged information on LNG purchase prices and pricing systems.

     Japanese companies were not present at this meeting. One official for a Japanese company said he "had a schedule conflict." Maybe so, but the fact seems to be that Japanese companies feared accusations of bid rigging if they were to talk about LNG prices among just corporate buyers. They support the general idea of strengthening bargaining powers through joint purchases, but they are still groping for ways to figure out details, such as conflicting interests in summertime supply-demand adjustments and legal matters.