* Japan will open city retail gas market from Saturday
* Follows similar step in electricity sector
* Power utilities looking to win new business
* Country is world's top LNG buyer
By Osamu Tsukimori
TOKYO, March 31 Power utilities are poised to
steam into Japan's city retail gas market, with the over $20
billion a year sector from Saturday opening to companies beyond
the regional gas firms that have typically piped the commodity
into homes around the country.
The liberalisation comes in the wake of similar moves in the
nation's electricity market, with the government looking to
dismantle the final barrier to cross-ownership for an energy
sector in turmoil since the 2011 nuclear disaster in Fukushima.
Increased competition in Japan's retail gas market could
boost the number of firms looking to purchase liquefied natural
gas in what is already the world's top LNG buyer.
The former power monopolies will be pushing to win a chunk
of the country's city gas markets to compensate for the around 3
million, or 5 percent, of the retail power customers they lost
to gas and other suppliers in the first 11 months since
electricity markets were fully liberalised.
"We have lost many retail power customers, but we can launch
a hard strike (into the retail gas market)," said Michio Sato, a
managing director at the retail energy unit of Tokyo Electric
Power Holdings (Tepco).
Electricity utilities, still mostly without operating
nuclear units, have few options for expansion except for
overseas business or domestic gas as power demand is in gradual
decline, Sato added.
Tepco, best known as the operator of the crippled Fukushima
Daiichi nuclear plant, has already nabbed a contract that was
previously held by gas giant Tokyo Gas (Togas). It has
signed a deal to supply 240,000 tonnes of LNG a year to Nippon
Gas, which has 320,000 customers around Tokyo.
"We are losing 300,000 customers at the start of the gas
liberalisation, so we will be in a severe situation from the
get-go," said a Tokyo Gas spokesperson.
A spokesman for Toho Gas, another major supplier,
said the company expected to lose some customers, but hoped to
limit its losses.
Power utilities are well positioned to enter the gas market
as they already account for roughly 70 percent of Japan's LNG,
using the fuel in gas-fired power stations.
Kansai Electric Power, Chubu Electric and
Kyushu Electric are registered to provide retail city
gas from April 1.
Procurement of gas is difficult for non-energy companies due
to the specialized terminals needed to bring in LNG and the lack
of a wholesale gas market, unlike the one in the power sector.
That explains why only a dozen firms are registered so far
to supply the city gas retail market, compared with more than
100 companies registered to sell retail electricity before last
year's power liberalisation, said Takeshi Fujimoto, Director of
the Gas Market Office at the government's Agency for Natural
Resources and Energy.
(Reporting by Osamu Tsukimori; Editing by Aaron Sheldrick and