TOKYO -- Japan's Ministry of Economy, Trade and Industry will assist domestic businesses in importing natural gas produced in Alaska, hoping to secure a relatively low-priced fuel from a region not susceptible to geopolitical risks.
Global energy producers, including Exxon Mobil and BP, are pursuing a natural gas project in northern Alaska, with a goal of starting production in 2023-24.
The ministry will sign a memorandum of understanding with Alaska's energy authority on Monday to ensure Japanese electricity and gas utilities can obtain favorable terms, including prices and reselling rules, in importing output from the project.
In the document, the ministry will seek progress reports on the development project in exchange for information regarding the restart of Japan's nuclear power plants, which affects liquefied natural gas prices.
The developers are planning to ship natural gas produced in northern Alaska to the southern part of the state through a pipeline and then liquefy it. The $40 billion project is expected to produce up to 20 million tons a year, more than 20% of Japan's total annual procurement.
Alaskan-produced LNG can be shipped to Japan in about a week, half the time needed to transport LNG from the Middle East, which provides 30% of Japan's annual purchases. Switching to the Alaskan fuel will slash costs by 10% by reducing transportation expenses. Japan is also scheduled to start importing shale gas produced in the continental U.S. in 2016.
The ministry plans to offer financial assistance to Japanese trading houses or engineering firms if they participate in the construction of LNG facilities in Alaska. It will also consider using programs that allow the government to guarantee up to 75% of borrowing for gas procurement projects or to shoulder half of investment in such projects.