The government's policy of promoting the use of natural gas for electricity generation may result in Japan becoming less attractive to oil producers, the head of Japan 's oil refining industry body warned Thursday.

Yasushi Kimura, chairman of the Petroleum Association of Japan and JX Holdings Inc. (5020.TO), told reporters that his conversations with officials in major oil producing nations indicate that the world has taken notice of the Japanese government's stated preference for natural gas for power generation.

"We want the government to be aware that the world is watching which way Japan will go," Mr. Kimura said.

The government has been promoting the use of natural gas in power generation as it is cheaper and results in lower carbon emissions. Most of the country's nuclear power plants are idle due to public safety concerns after a massive earthquake last year. For the longer term, the government focuses on renewable energy sources.

In late June, a state-appointed panel said Japan should draw up a basic plan to build domestic pipelines that would link regional gas pipeline networks to create a national grid for securing energy supply.

The report's suggestions include simplifying regulations on gas pipeline construction, creating new regulations facilitating cooperation between gas companies in building pipelines and providing financial support such as tax breaks.

Liquefied natural gas imports in the 12 months from April 2011 rose 18%, while crude imports fell 2.4%, government statistics showed.
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