Japan's Chubu Electric to Begin US Shale Gas Imports Ahead of Schedule

Chubu Electric Power will likely begin importing US shale gas one year ahead of schedule in order to bring down high fuel costs and improve its bargaining position with other suppliers, according to a report by Japan’s Nikkei Asian Review.

The Japanese utility has signed a contract with American shale gas developer Cheniere Energy to procure a total of 700,000 tons of LNG between July 2016 and January 2018 from the Sabine Pass terminal in the US.

LNG made from shale gas costs 20-30% less than LNG produced in the Middle East or Southeast Asia, Nikkei adds.

According to Nikkei, beginning shale gas procurement early will affect crude oil price fixing which would hold down prices for more expensive fuel from such regions as the Middle East.

Buyers of US-produced LNG have a great deal of freedom, with no regulations preventing them from reselling their surplus which becomes a useful card to play in price negotiations with powerful sellers, the news report states.