Commissioner William P. Doyle meets with Japanese public and private sector officials to discuss U.S. natural gas, exports, and the Panama Canal

Contact: David Tubman, Counsel, dtubman@fmc.gov

Earlier this week, Commissioner William P. Doyle met with Japanese public and private sector officials to discuss U.S. natural gas, exports, and the Panama Canal. Japan is the world’s largest importer of liquefied natural gas (LNG). The country has relied on imported natural gas for decades as part of its energy portfolio. However, the Tohoku earthquake and tsunami of March 11, 2011, disabled the Fukushima Daiichi Nuclear Power Plant. Subsequently Japan has increased its level of reliance on LNG imports.

The U.S. may become an important LNG supply source for Japan in the coming years. With the widening of the Panama Canal expected to be completed in 2015, LNG exported from the U.S. to Asia would save nearly 2 weeks transit time if the Panama Canal is utilized. Currently, there are no LNG tankers utilizing the Panama Canal.

“Japanese officials are interested in learning more about the tolls and cost structure associated with LNG tankers transiting the Canal,” said Commissioner Doyle. He continued, “It’s important that the toll structure and economics work for all parties– Panama wants LNG business which it does not have right now – natural gas produced in the U.S. must compete on the world market with LNG from Russia, Australia and the Middle East – and Asia is where the demand will come from.”

Japanese interests have actively pursued discussions with the Panama Canal Authority (ACP) on transit costs; the Japanese Shipowners Association and some of its auto-manufacturers were one of the first groups to engage in substantive talks with the ACP.

ACP officials have been conducting meetings with all segments of the maritime industry on the waterways toll structure. In early October, ACP Administrator Jorge Quijano met with the Union of Greek Shipowners, the International Association of Independent Tanker Owners (INTERTANKO) and the International Association of Dry Cargo Shipowners (INTERCARGO) in Greece.

The ACP is consulting with the Society of the International Gas Tankers and Terminal Operators (SIGTTO) to determine how it can best serve the LNG market. According to its website, SIGTTO’s purpose is to promote shipping and terminal operations for “liquefied gases which are safe, environmentally responsible and reliable.”

Commissioner Doyle committed to work with the Japanese and all interested parties to ensure usage of the expanded Panama Canal is a success.

The Obama Administration is focused on U.S. manufacturing and exports.

In September the U.S. Department of Energy conditionally approved the fourth LNG terminal for the export of natural gas.

Yesterday, the Secretary of Transportation Anthony Foxx and Acting U.S. Maritime Administrator Paul “Chip” Jaenichen announced that that the Maritime Administration would provide funding for two projects supporting the increased use of alternative fuels and technology in the maritime industry. The funds will be used to collect information on use of LNG for marine propulsion and study the issues and challenges associated with shore side storage and bunkering of LNG vessels. Additionally, yesterday, Aker Philadelphia Shipyard (APSI), announced that U.S.-flag domestic carrier Matson Navigation Company agreed to construct two 3,600 TEU container ships in the Pennsylvania shipyard. Firm contracts are in place for the two vessels with a total value of $418 million. These dual fuel ships and will be ready for conversion to LNG propulsion and will be delivered in 2018. In the meantime, Aker Philadelphia is in the process of constructing two tankers for the Alaska Jones Act trade to be delivered in 2014: and it will build eight product tankers scheduled for delivery between 2015 and 2017.

From left to right: Kazuhiro Yokoi (Chubu Electric Power Company), David Tubman (FMC), Yoshiro Taguchi (Japanese Embassy), Hidehiro Muramatsu (Japan Oil, Gas, and Metals National Corp.), William Doyle (FMC Commissioner), Takashi Horie (Mitsubishi), and Nobukazu Nagai (Japan International Transport Institute, USA).