Driven by concerns over energy security and the potential for harsher sanctions against Russian fuel exports, Japan’s government is urging its liquefied natural gas (LNG) importers to secure new long-term supply deals. The Ministry of Economy, Trade and Industry has been engaging with Japanese buyers and overseas suppliers to promote the signing of more extended LNG contracts.
This move reflects Japan’s strategic approach to ensuring a stable energy supply for its power producers and industries as it navigates the transition towards cleaner energy sources. The government’s efforts come in response to the recent surge in 27-year LNG deals secured by European and Asian rivals with Qatar, raising questions about their climate commitments.
Japan, the world’s largest LNG importer in 2022, recognizes the importance of diversifying its energy sources and securing reliable long-term supply agreements to meet its energy needs in the coming decades. By locking in LNG supplies, Japan aims to safeguard its energy security while balancing its transition to cleaner energy sources.
Japan will continue to need long-term contracts to provide stable energy supply, which will need to be balanced with purchases on the spot market, said an official at the trade ministry. Pursuing carbon neutrality will need to take place in parallel, the official said.
Annual long-term LNG supply contracted by Japanese buyers will decrease by 30 percent from 2022 levels to 55 million tons by 2030, according to a survey conducted by the Japan Organization for Metals and Energy Security.
Russia’s invasion of Ukraine last year upended gas markets around the world, triggering record-high prices and stoking worries about fuel security. At the Group of Seven summit earlier this year, Japan and Germany pushed for the inclusion of language that left the door open for public investment in gas.