The vessel with the largest spherical tanks in the liquefied natural gas industry is taking the first shipment from Dominion Energy Inc.’s Cove Point terminal in Maryland to the Asian nation. With a name that means cherry blossom, the ship can serve “as a symbol of friendship and goodwill between Japan and the United States,” according to co-owner Nippon Yusen KK.
The shipment is the “the first of many” as “US LNG will power millions of Japanese homes and businesses,” according to a post on Twitter from the U.S. embassy in Tokyo.
It’s an easy win for both countries.
For the Trump administration, which has been pushing for Asian purchases of America’s abundant shale gas supplies to reduce a trade imbalance, it suggests the pressure may be working. Japan, the largest buyer of LNG in the world, needs the fuel to meet power demand at its highest level since the 2011 Fukushima nuclear disaster. Most importantly, keeping good relations with the U.S., the largest buyer of its exports after China, is vital for Japan’s economy.
“There’s definitely been concern in the Japanese government about the Trump administration’s focus on trade deficits, so this may be a effort to demonstrate that Japan is working that issue,” said Jason Feer, global head of business intelligence at Poten & Partners. “It’s interesting the first Japanese-owned cargo from that facility is actually going to” that country.
Just a few weeks after the second U.S. gas export terminal started commercial service, LNG Sakura left the facility on April 22 and is headed for Japan, Hiromi Sato, a spokeswoman at the U.S. embassy in Tokyo, said in an email late on Tuesday.
Although Asian nations are signing multiple long-term contracts with U.S. LNG exporters, there is uncertainty over how much they would actually import themselves rather than sell to the global market’s highest bidder. The latter case wouldn’t help reduce deficits with the U.S., so confirmation that LNG Sakura’s load is a Japanese import comes as a good sign of cooperation to avoid a pending trade war.
During Japanese Prime Minister Shinzo Abe’s visit to the White House this month, he and Trump announced a new trade dialogue.
Shale gas sent from U.S. fields is expected to rival Australia and Qatar for worldwide dominance in the next five years as three more export terminals may open on the Gulf Coast by 2019.
Japan is already the fifth largest importer of U.S. LNG, having bought 20 cargoes as of April 18 from Cheniere’s Sabine Pass since it started liquefying the fuel in 2016. Dominion’s Cove Point has agreements to sell gas to a joint venture of Sumitomo Corp. and Tokyo Gas Co., but those cargoes could be resold in transit.
Kansai Electric Power Co. is the beneficial owner of Sakura, with 70 percent. NYK owns the remaining stake in the vessel.