US poised to approve shale gas exports to Japan

The US government is in the final stages of lifting its embargo on shale gas exports to Japan, Kyodo News Agency reported Thursday, citing diplomatic sources in Washington. The Energy Department is expected to give conditional approval, including on total volume control, as early as April and then start examining shale gas export projects involving Japanese companies, the sources were quoted as saying. The first approval for shale gas export projects could be given by this summer, which would be a welcome development for Japan where liquefied natural gas (LNG) imports are on the rise following the suspension of its nuclear reactors in the wake of the 2011 Fukushima nuclear crisis. Japan is the world's No. 1 LNG importer, taking in a record 87.3 million tons in 2012. LNG prices in the US have been falling due to a sharp increase in shale gas output. Applications for nearly 20 shale gas export projects, including from Japanese trading houses and utility firms, have been filed with the US government. The US has remained cautious about exporting shale gas to countries without free trade agreements, allowing exports to such countries only if each business project is deemed a public good after examination. Given concerns that expanding exports would trigger price hikes in shale gas and further gas development would affect the environment, the Energy Department suspended examinations on shale gas export projects. The department is likely to decide to lift the embargo on shale gas exports next month, but the decision may be delayed if it takes a long time to summarize such opinions. Since it takes time to build necessary infrastructures for shale gas exports and arrange means of transport, actual shale gas shipments to Japan will likely begin in 2017 or later.