Subject: [cwj 75] Japan Turns to Australian Gas Fields for Cleaner Energy
From: Corporate Watch in Japanese <>
Date: Thu, 17 Aug 2000 16:50:50 -0700
Seq: 75

Thursday, August 17 1:53 PM SGT 

Japan Turns to Australian Gas Fields for Cleaner Energy

SYDNEY, Aug 17 Asia Pulse - The increasing demand for less environmentally
damaging energy sources has turned Japan's sights to
Australian gas fields.

Nippon Mitsubishi Oil Corp has discovered a natural gas field in the Timor
Sea with daily production capacity of 65.5 million cubic

A decision on whether to commercialise it will come by the end of 2001.

Another Japanese petroleum company, Indonesia Petroleum Ltd (INPEX), has
found a gas field on the North West Shelf of Western
Australia, which is said to produce 22 million cubic feet of natural gas
per day.

Oil companies are not alone in their interest in gas development.

Osaka Gas Co purchased a 10 percent stake in the Greater Sunrise and Evans
Shoal gas fields in the Timor Sea from Woodside
Energy Ltd and Shell Development (Australia) Pty Ltd.

Osaka Gas hopes to ship four million tons of LNG from the gas field to
Japan starting 2010.

"Owning a stake gives us more bargaining power in price negotiations," said
a spokesperson at Osaka Gas.

"It will also help us meet higher gas demand in the future," he said.

Japan is currently the world's largest importer of LNG, purchasing over 49
million tons in 1998 from countries like Indonesia,
Malaysia and Australia.

But Japan still relies heavily on oil, coal and nuclear power, with only 12
percent of its total energy source coming from natural gas.

The government is trying to change this to meet its commitment under the
Kyoto Protocol to reduce greenhouse gas emissions.

A committee of Japan's Ministry of Industrial Trade and Industry recently
issued an interim report proposing increased use of natural
gas due to its lower carbon dioxide emission.

Utilities are not as enthusiastic as the government in shifting to LNG due
to its high transportation costs.

But strong public opposition toward the construction of new nuclear power
plants are pressuring power firms to turn to LNG.

"Utilities see nuclear power as the best choice for securing stable energy
supply and meeting environmental needs at the same time,"
said Satoshi Abe, senior analyst at Daiwa Institute of Research Ltd.

"But with nuclear power plant projects at a standstill, they have no choice
but to rely on LNG," he said.

Growing interest in LNG means more business opportunities for Australia,
which currently exports over seven million tons to Japan
each year.

"Australia's strength is its political stability and proximity to Japan,"
said Hiroshi Ikeda, Sydney office general manager of Japan
National Oil Corp, a government body that offers financial assistance to
Japanese oil and gas projects.

"But it may have a tough time competing in terms of price," he said.

Asian and Middle Eastern countries with abundant gas supplies are
scrambling to get contracts by offering cheaper deals.

Such intense competition, along with buyers' demand for shorter-term
contracts, is making gas development projects more difficult to

"To get a LNG project off the ground, you really have to tie yourself into
20-year contracts to pay the loan off," said Paul Kay,
manager at the Industry, Science and Resources Ministry's petroleum and
electricity division.

"But there's a lot of pressure in the marketplace to do shorter contracts,
and that's probably what's going to happen, even for
Australia," he said.

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