2024-07-14 18:11:33
Japanese companies are investing in creating markets for liquefied natural gas (LNG) in East Asia as they stockpile surpluses of the blue fuel amid falling consumption. This is stated by Reuters in an analysis on the subject.
As more Japanese nuclear plants come back online and renewable energy production gains momentum, Japan’s LNG imports are at their lowest level in more than a decade. This prompts companies to turn to other countries in Asia to realize the agreed surplus quantities. They were bought on the basis of contracts concluded during the turmoil in the natural gas market. An example of a similar situation is Russia’s invasion of Ukraine, which began in February 2022, BTA reports.
Japan plans to remain among the major players in the LNG market to ensure its energy security. However, the Asian country is looking for markets to sell its gas surpluses. The Japanese government’s strategy is to maintain liquefied natural gas reserves of no more than 100 million tons.
This year, Tokyo Gas, Japan’s largest gas company, announced that it was exploring a 1.5-gigawatt LNG power project in Vietnam.
In addition, the Japanese concern purchased a stake in an LNG regasification terminal in the Philippines.
Japanese trading companies Marubeni and Sojitz opened a large power plant in Indonesia, with a capacity of 1.8 gigawatts, which produces electricity thanks to LNG.
JERA, the joint venture between Tokyo Gas and Kansai Electric Power, is involved in more than 30 gas projects, according to data from the Institute for Energy Economic and Financial Analysis (IEEFA) and Reuters.
They are implemented in Bangladesh, India, Indonesia, Malaysia, Myanmar, Philippines, Singapore, Taiwan, Thailand and Vietnam. The Japanese consortium participates in their implementation or supplies the necessary raw materials.
“The demand for LNG in Japan is difficult to predict, but the government wants to secure a stable supply in the long term.” This is stated by Yoko Nobuoka, senior analyst for the Japanese energy market at the London Stock Exchange Group (London Stock Exchange Group – LSEG).
“The development of its own trading capacity and the creation of a common Asian gas market will help increase Japan’s energy security. It will also hedge the risks that would arise from the accumulation of excess liquefied natural gas,” notes Nobuoka.
Japan increased imports of LNG after the 2011 Fukushima nuclear disaster caused all of the country’s nuclear reactors to be temporarily shut down. Tokyo has increased its involvement in LNG projects around the world to ensure its supply of the blue fuel.
However, the country’s return to nuclear energy and the increased production of electricity from RES are forcing Japan to reduce LNG imports for its own needs. Last year, shipments fell 8 percent to their lowest level since 2009.
“There are different paths to achieve carbon neutrality in Asia, to reach zero net emissions (of harmful gases in the atmosphere – note ed.),” the Japanese Ministry of Industry states. It notes that this can be achieved through “natural gas, LNG, renewables and energy efficiency practices”.
LNG supplies to Japan reached 102 million tonnes in the twelve months to the end of March 2023.
Tokyo’s growing liquefied gas ambitions are changing Japan’s LNG strategy, according to Reuters.
In fiscal year 2021, 53 percent of LNG purchased by Japanese firms (45 million tons) was delivered under contracts prohibiting its resale. This condition has been imposed by some suppliers, including Qatar, according to the Japan Organization for Metals and Energy Security.
Deliveries realized under this condition have decreased to 42 percent in the last financial year. This is due in part to the fact that Japan has made more LNG purchase deals with more flexible producers such as the US and Australia.
“By 2030, 60 percent of contracts are expected to not include clauses restricting the resale of LNG. This means that Japan’s ability to trade LNG is likely to increase during this decade.” This is stated by Christopher Dolman, a specialist in the liquefied gas market at the Institute for Energy Economic and Financial Analysis.