Japan Looks to Australia and US to Replace Expiring LNG Contracts

Diversification of Japan’s LNG supply sources is likely to prove crucial for energy security with focus on long-term supplies from Australia and the US as existing contracts expire according to a Reuters.

• LNG accounts for about a third of Japan's power generation and it is the world's second-largest importer behind China despite an increase in renewable energy and nuclear reactors restarts.
• Japanese LNG buyers are looking to Australia and the US despite new carbon emissions rules in the Australia from mid-2023 and the US pause on issuing new export licenses. Buyers have agreed equity deals in five projects in the two countries since 2022. Buyers have secured 10 to 20 year offtake contracts totalling 8% of Japan's 2023 consumption at more than 5m metric tons annually.
• JERA last month agreed to buy a 15.1% stake in Woodside Energy's Scarborough project in Australia. Kyushu Electric Power is considering buying a stake in Energy Transfer's Lake Charles LNG project.
• Some long-term supply contracts with Australia, Indonesia and Russia are due to expire between 2027 and 2032. LNG imports from Russia last year fell 10.7% from 2022.
• Contract with Qatar offer limit flexibility and increasing supplies from Oman are small.

Source: Reuters