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Japan likely to face LNG shortage in 2010-- report

TOKYO, Feb 12 (KUNA) -- As the amount of liquefied natural gas (LNG) imported from Indonesia is expected to fall significantly from 2010, Japan, the world's bigget importer of LNG, likely will be seriously affected, a top-selling Japanese newspaper reported Tuesday.
Indonesia currently supplies 22 percent of LNG imported by Japan, but final agreement on the reduction is expected to be reached between Indonesia's state-run oil company Pertamina and six Japanese firms later this month, said the Daily Yomiuri.
Indonesia has decided to reduce LNG exports to secure the gas for its own use in the face of a worldwide shortage and the rising cost of energy resources. Indonesia has raised the margin of the reduction from its original plan to halve its supply. Consequently, Japan is likely to see a shortfall of about 9 million-10 million tons, the daily said.
Japanese companies will deal with the problem by increasing imports from Australia and other suppliers with which they have already concluded contracts, according to the paper. However, LNG development projects are slowing down worldwide due to the difficulty of turning a profit from the product due to the associated cost of building LNG plants. In the Sakhalin-2 oil and gas development project off Sakhalin, Russia, LNG supplies destined for Japan will be delayed from the originally scheduled 2008, to spring 2009. It was also planned to import 4.2 million tons of LNG annually from Gorgon, Australia, starting in 2010, but this also is likely to be delayed until 2012 or later.
Meanwhile, Qatar is notorious for its aggressive business approach and spot LNG prices are heavily affected by day-to-day market fluctuations, thus increasing the likelihood of significantly higher procurement costs, the paper said.
Japan currently has about 100 power plants that use LNG as fuel. Because LNG has a high burning efficiency and emits little carbon dioxide, demand for the gas is expected to increase. In addition to China, India and other rising economies, the US and European countries, which have been importing gas through pipelines, are also increasing LNG imports. (end) mk.bz.
KUNA 121715 Feb 08NNNN