Reuters: Japan's Tepco, Chubu Electric Venture Aims for Cheapest LNG in East Asia

A venture set up last month by Tokyo Electric Power (Tepco) and Chubu Electric Power to handle their fuel business aims to become the cheapest liquefied natural gas (LNG) buyer in East Asia, its president said in an interview.

Jera is set to become the world's single biggest buyer of LNG - exceeding Korea Gas Corp with annual purchases of nearly 40 million tonnes once it fully integrates the partners' fuel procurement operations next year - and plans to use its bulk to drive prices lower, President Yuji Kakimi told Reuters.

"Jera has a role to play in tackling how to reduce Asian prices," he said. "The target is the cheapest price in East Asia that is not out of line with prices in Europe and the United States," he said.

Asian buyers of natural gas have traditionally paid higher prices, a so-called Asian premium to gas prices in the United States and Europe because of the high cost of LNG delivered on tankers and relatively less extensive pipeline networks.

The shutdown of all nuclear reactors following the Fukushima nuclear disaster in 2011 also forced Japanese utilities to import record amounts of coal and expensive LNG for power generation, pushing prices even higher. MORE