January 22 — Last Tuesday at the Westin Hotel in Houston, the US-Japan Business Council and Pink Petro Executive member Donna Cole of Cole Chemical invited US Energy Attaché Jeffrey Miller to speak to a room full of Houston business officials on Japan’s energy industry. Executive member Denise Sanders with Atwood Oceanics was also in attendance.
The lecture’s topics ranged from an overview of Japan’s energy and nuclear non-proliferation achievements in 2015, to the liberalization of the country’s power policies and its growing production of renewable energy. Throughout it all, one point was made clear: the future is looking bright for US-Japan energy trade.
In 2011, when all of Japan’s Nuclear Plants were shut down in response to the Fukushima Daiichi incident, the country saw an almost 30% loss in domestic energy production capacity. Since then, it has sought new sources of energy to fill its consumption demands. Though its renewable energy output has over doubled since 2012, with particular advancements in solar energy, Japan is still 86% reliant on fossil fuels, most of which are imported. In the past, these imports came primarily from the Middle-East, but now Japan is looking to diversify in order to provide, as Trade and Industry Minister Motoo Hayashi said last December, “a stable supply of energy resources and the strengthening of national security for Japan.”
This focus on diversification comes just as the US lifts its 40 year ban on oil exports, and, unsurprisingly, Japanese companies have already begun to target the newly opened US market. By February, over 300,000 barrels of American crude oil, sourced from areas such as Eagle Ford, Texas, are slated to leave for Japanese shores. The shipment, purchased by Cosmo Energy Imports, is due to arrive in April, where it will be refined into gasoline and petroleum products.
However, Japan’s energy focus is not only for oil. JERA, a joint venture set up between Tokyo Electric Power (TEPCO) and Chubu Electric Power, is set to become the world’s largest buyer of LNG by the end of the year. Again, the timing is ideal for US-Japan trade. With the low production cost of US natural gas and several Gulf Coast liquefaction terminals such as Freeport LNG and Sabine Pass coming online, US LNG will soon be an attractive alternative in the world marketplace. Furthermore, the US’ new LNG export capacity coincides with the completion of the expanded Panama Canal, which will enable the passage of modern 1,000 foot long LNG tankers and drastically reduce the cost of transporting LNG to Asia markets. With all of these market factors working in tandem, it’s no wonder that Mr. Miller is confident that 2016 will be a good year for the US-Japan energy trade.
Reporting by: Mayor's Office of Trade & International Affairs