TOKYO, March 29 (Reuters) - Japan is planning to launch the
world's first futures market for liquefied natural gas by March
2015 in a move that will help the top buyer of the fuel cut its
import costs, the trade ministry said on Friday.
LNG is expensive in Asia <LNG-AS> at more than $15 per
million British thermal units (mmBtu) as it is linked to oil,
while a boom in U.S. shale gas output has pushed down prices
there to just over $4 per mmBtu.
Japan, which consumes about a third of the global LNG
demand, has seen its imports soar after the devastating
Fukushima crisis in 2011 crippled its nuclear power sector. It
paid a record 6 trillion yen ($63.82 billion) for overseas
purchases of the fuel last year, up 25.4 percent from 2011.
The country aims to establish a cash-settled LNG futures
market at Tokyo Commodity Exchange to give importers, including
power utilities and city-gas suppliers, a chance to hedge risks
and try to break its reliance on oil-linked pricing, a trade
ministry official said.
Japanese firms -- including Inpex, Mitsubishi Corp
, JX Nippon Oil & Energy, Tokyo Electric Power
Co and Tokyo Gas -- and the trade ministry
have reached a basic agreement on setting up the LNG futures
market, he said.
Japan is hoping to launch an accessible market for major
Asian buyers including South Korea and Taiwan, and will consider
asking exchanges in Singapore and the United States to establish
similar LNG futures markets in their nations, the trade ministry
To boost liquidity, Japan aims to equip the futures - which
will trade in U.S. dollars - with a Exchange of Futures for
Physical function that would allow a physical delivery to settle
positions if market participants wish, just like U.S. crude and
London Brent futures.
The country will consider setting up a physical-settled LNG
futures market in the future, trade ministry sources said.
($1 = 78.6100 Japanese yen)
(Reporting by Osamu Tsukimori; Editing by Himani Sarkar)