Japan and India agreed Tuesday to establish a liquefied natural gas buying group among Asian countries to fight for lower LNG import prices.
They invited other Asia LNG buyers, including South Korea and Singapore, to join the group during a major LNG conference in Tokyo.
LNG in Asia has been traded under a model that links prices to crude oil prices. That make LNG in Asia more expensive than in Europe and North America, according to a statement from the two countries.
At the LNG conference in Tokyo, LNG export countries like Australia warned that Japan’s move may backfire, enflaming conflicts between LNG producers and consumers.
Japan is the world’s largest LNG buyer. It’s been pushing for a more flexible pricing system based on market supply and demand.
India has announced plans to increase LNG purchases to defuse a domestic energy crisis.
LNG demand in Asia rose 16% in 2012. Wood Mackenzie predicts Asia LNG imports will account for 56% of global demand by 2018.
Korea Gas Corp. and GAIL India Ltd have signed long-term LNG purchasing contracts with U.S.-based Cheniere Energy Inc. to lock in stable imports of the fuel.