By MARI IWATA
TOKYO -- A Japanese energy company on Tuesday said it is partnering a Canadian firm to export North American natural gas from Canada's West Coast to Japan and elsewhere in Asia, aiming to meet part of Japan's sharply rising demand for the clean-burning fuel to make up for idle nuclear power capacity.
Under the 50:50 plan by oil refiner Idemitsu Kosan Co. and gas pipeline operator AltaGas, the two may build a liquefied natural gas export terminal near Kitimat in British Columbia, possibly starting LNG exports mainly to Japan as early as 2017.
"Canada is one of the world's most resource-rich countries and has proven to be a very promising new supplier of gas to Japan. We believe that a joint venture with AltaGas will enhance the businesses of both companies while making a significant contribution to the national interests of both Canada and Japan," Idemitsu president Kazuhisa Nakano said in a press statement.
The venture expects to use AltaGas' 500-kilometer natural gas pipeline linking gas-rich Alberta to Kitimat on the Pacific coast.
"If we can expand the capacity of the pipeline, we would like to build a terminal with 2 million metric tons of capacity," an Idemitsu spokesman said.
The joint venture also plans to develop a liquefied petroleum gas export business, building on the Japanese company's expertise in the sector. Idemitsu is a shareholder of Astomos Energy Corp., one of the world's largest LPG suppliers.
Several Japanese companies are trying to line up supplies of US and Canadian gas, encouraged by gas there costing less than a quarter of the price of LNG imported into Japan from suppliers in the Asian region. Export projects being looked at include both the shipping of gas from the west coast of Canada and via the Gulf of Mexico.
The Idemitsu-AltaGas partnership is in a good position to clear regulatory hurdles, as Canada is more positive about gas exports than the US, the spokesman said.
Several LNG projects have sought US government approval for exports. But so far, only Cheniere Energy has received permission to ship gas abroad, from its terminal in Louisiana, but only to countries that have free-trade agreements with the US. Japan doesn't have such a treaty with the US.
Under the plan, the two companies intend to buy gas in the open market to feed the terminal, rather than invest in gas production, the spokesman said.
Japan's LNG imports rose 11% to 87 million tons in 2012, following 12% growth in 2011, as power utilities switched to thermal power generation in the aftermath of the nuclear power accident in Fukushima in March 2011.
Canadian Minister of Natural Resources Joe Oliver has visited Japan twice since the Fukushima nuclear disaster, offering Canadian LNG for Japan.
There are several LNG exporting projects on Canada's Pacific Coast and if all were approved, they would be able to export roughly 66 million tpy of LNG, Mr. Oliver said.
Dow Jones Newswires