Japan aims to boost LNG trade across Asia

Japanese companies are strategically increasing their investments in liquefied natural gas (LNG) markets in Asia, expecting a surplus of LNG inventories in the coming years due to falling domestic demand.

The change is due to factors such as the restart of nuclear power plants and the growing popularity of renewable energy sources in Japan, which led to the lowest LNG imports in more than a decade, News.Az reported, citing Reuters.

As more nuclear plants come online and renewable energy gains popularity, Japan’s LNG imports are at their lowest in more than a decade, prompting companies to turn to Asia to get rid of supplies squeezed by earlier market shocks.

Energy flexibility and security concerns mean Japan wants to remain a big player in LNG, but it is looking for markets to sell surpluses, in line with the government’s strategy to keep volumes at 100 million tonnes by boosting gas demand in Asia.

This year, Tokyo Gas announced the launch of a 1.5-gigawatt LNG power project in Vietnam and bought a stake in an LNG regasification terminal in the Philippines, while trading houses Marubeni and Sojitz launched a 1.8-GW LNG-fired power plant in Indonesia.

Japan, led by JERA, Tokyo Gas, Osaka Gas and Kansai Electric Power, is a stakeholder, raw material supplier or research participant in more than 30 gas-related projects, according to data from the Institute for Energy Economic and Financial Analysis (IEEFA) and Reuters.

Whether they are already operational or are in the pipeline, these facilities are located in Bangladesh, India, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Taiwan, Thailand and Vietnam.

Japan increased its LNG imports after the 2011 Fukushima nuclear disaster that led to the closure of all of its nuclear reactors. To secure LNG supplies, Tokyo has increased its stake in LNG projects around the world.

But the resurgence of nuclear power and the rise of renewables have forced resource-strapped Japan to cut LNG imports to meet its own needs. Deliveries fell 8% last year to their lowest level since 2009.

In 2020, the Ministry of Industry adopted a plan to maintain LNG transshipment capacity, including trade, at 100 million tonnes per year by 2030. A key element of this plan was building Asian gas markets.

“There are different pathways to achieving carbon neutrality or net zero emissions in Asia,” METI said in emailed comments. “Gas and LNG, as well as renewables and
“Energy conservation may play a role in these pathways.”

LNG deliveries from Japan, both for domestic use and to third countries, amounted to 102 million tonnes in the year ending March 2023.

News.Az