ABSTRACT
The special situation of Japan without pipeline links to suppliers forced the nation to look to liquefied natural gas (LNG) supplies to meet its gas needs. Persuaded that LNG was cheaper, cleaner, and more reliably available than the petroleum fuels which they were burning for the bulk of their power generation, electric utilities began switching over to LNG in earnest. It is also very significant that city gas utilities found the manufacturing cost of gas derived from LNG to be lower than that of manufactured gas using naphtha or Liquefied petroleum gas. In the field of gas marketing, LNG price conditions have become tougher in accordance with the expansion of the gas share. Most “premium markets” have already been converted from petroleum to city gas derived from LNG. In order to present LNG pricing mechanisms suitable for penetrating the Japanese energy market, attention has to be given to trends in the capital costs of the LNG business.
