HispanicBusiness

The government has asked the U.S. government to grant permission for the export of liquefied natural gas (LNG) produced in the United States to Japan, according to sources.

The government is trying to diversify energy supply sources to cope with shortfalls in energy supply after the shutdowns of nuclear reactors in the nation and the recent decision to reduce imports of Iranian oil.

The United States regards LNG as a strategic material and restricts exports of the product.

At the request of Japan--a key U.S. ally--the two governments have commenced talks so Prime Minister Yoshihiko Noda and U.S. President Barack Obama can reach an agreement on exporting LNG during Noda's scheduled visit to the United States in spring.

According to the sources, the Japanese government is asking the U.S. government to permit the export of LNG produced by private manufacturing projects in the states of Louisiana and Maryland.

U.S. production of natural gas is on the rise thanks to technological advances. The two states' projects are projected to result in exports of 17 million tons of LNG a year.

If permission is granted, exports of LNG to Japan will likely start in 2016. It would mark the first export to Japan of LNG produced on the U.S. mainland, with the exception of Alaska.

Mitsubishi Corp. and other trading companies, power utilities such as Chubu Electric Power Co., as well major gas companies such as Tokyo Gas Co., have expressed interest in the projects.

The U.S. government restricts exports of LNG produced on the U.S. mainland to countries that have not signed free trade agreements with the United States due to fears of a surge in gas prices in the country.

Under the Natural Gas Act, companies must obtain permission from the Energy Department to export domestically produced LNG.

Permission is quickly granted to countries that have signed FTAs with the United States. For countries without an FTA, the department makes a decision after reviewing whether it would serve national interests.

So far, there has been only one case in which permission was granted for exports to such a country.

The Japanese government recently announced it will reduce imports of Iranian oil after the United States imposed sanctions on Iran.

In addition, due to the increasing number of idled nuclear plants, Japan's consumption of LNG, mainly used for thermal power generation, is estimated to have risen by 17 million tons to 53 million tons in 2011.

This figure is much higher than estimates before the Great East Japan Earthquake, prompting the government to urge the U.S. government to permit LNG exports to Japan.

As power companies plan to raise electricity charges due to higher fuel costs, the measure is expected to minimize the rate hikes, according to experts.