Japan and the European Union are due to hold a ministerial-level meeting in Tokyo on Thursday when they are expected to agree to press producers to allow the free trade of natural gas, including LNG, a Japanese government source told Platts Wednesday.
Japanese Minister of Economy, Trade and Industry Yukio Edano and EU Commissioner for Energy Gunther Oettinger are set to hold the fourth round of a Japan-EU energy dialog on Thursday, when the agreement is expected, the source said.
The two sides have already held three rounds of working-level talks that are being upgraded to ministerial level to discuss closer cooperation on the promotion of free trade of natural gas, the source said.
The joint effort comes at a time of geographic shifts in gas demand and is designed to address whether the three major gas markets -- Asia, Europe and North America -- can continue to be separate markets, both in terms of contractual terms and price benchmarks, given the expected start of LNG exports from North America.
Japan's LNG demand has soared since the March 2011 Fukushima nuclear disaster and Tokyo has been seeking additional supplies from major exporters such as Qatar, which has insisted on retaining oil-linked contracts for its LNG exports.
But as gas prices in the US have collapsed as a result of the shale gas explosion, Japan has been looking to North America for alternative supplies in the hope of securing Henry Hub prices that are currently at a fraction of oil-linked LNG prices.
The Japanese and EU ministers are also likely to discuss how Tokyo and Brussels can cooperate more closely to enhance the safety of nuclear power generation by taking lessons from the March earthquake and nuclear disaster in Japan, the source said.
Japan is due to host a public forum of LNG producers and consumers in Tokyo on September 19 to debate the emergence of the new LNG world order.