Japan is strengthening its liquefied natural gas (LNG) supply security as the conflict involving Iran disrupts Middle Eastern exports and threatens shipping through the Strait of Hormuz.
Last month, Japan’s Organization for Metals and Energy Security (JOGMEC) and Petronas LNG signed an agreement establishing a framework for emergency LNG procurement if electricity or gas supplies in Japan are threatened.
No fixed supply volumes or delivery schedule were announced, while Malaysia’s domestic gas requirements could limit the availability of cargoes during a wider supply disruption.
Petronas Executive Vice-President and CEO of Gas & Maritime Business, Datuk Adif Zulkifli, said the agreement would provide a more flexible framework for future LNG supply arrangements.
“We are better positioned to respond to evolving energy needs and contribute to greater supply resilience,” he said.
The agreement comes as damage to Qatar’s LNG infrastructure and uncertainty over shipping through the Strait of Hormuz continue to put pressure on global gas markets.
damaged two LNG trains at Qatar’s Ras Laffan export complex in March, removing around 12.8 million tonnes per year of liquefaction capacity, equivalent to approximately 17% of the country’s total LNG capacity.
The disruption has continued despite a partial recovery in energy shipments through the Strait of Hormuz. According to shipping data from Kpler cited by Reuters, Qatar exported around 1.6 million tonnes of LNG in September, less than a quarter of its pre-war average.
Japan’s direct exposure to Middle Eastern LNG is relatively limited. The country imported just under 65 million tonnes in 2025, with around 11% sourced from the Middle East and approximately 5% from Qatar. Australia and Malaysia together accounted for more than half of its imports.
However, disruptions to major exporters can tighten global LNG supplies, increasing competition for available cargoes and exposing import-dependent countries to higher prices.
In an published by Nikkei Asia on 13 October, Vandana Hari, founder of Singapore-based energy market intelligence provider Vanda Insights, argued that Japan needs to strengthen its LNG security through a combination of geographically diversified supply, flexible contracts and emergency procurement arrangements.
Hari noted that Japan entered the conflict with considerably less exposure to Middle Eastern LNG than oil, but remains vulnerable to disruptions in the global gas market.
The risks were highlighted in February when Japan’s Ministry of Economy, Trade and Industry (METI), JERA and QatarEnergy signed a memorandum of understanding to cooperate on emergency LNG supplies.
The arrangement allows METI to request that QatarEnergy consider supplying additional LNG to Japanese buyers during periods of serious supply constraints.
The ongoing conflict in the Middle East has seen the closure of the Strait of Hormuz and continues to impact global supply chains © Shutterstock.com
JERA Chairman and Global CEO Yukio Kani said at the time that the framework would help Japan respond to potential shortages.
“By strengthening coordination with METI and QatarEnergy, we are better positioned to respond with flexibility and agility to ensure stable energy supply for Japan,” he said.
However, the subsequent damage to Qatar’s LNG facilities has demonstrated the limitations of relying on emergency supplies from producers exposed to the same geopolitical disruption.
Japan has also sought to diversify its long-term LNG procurement. In June, JERA signed a 20-year agreement with Petronas for up to two million tonnes of LNG annually from 2028, primarily sourced from Malaysia.
Ryosuke Tsugaru, JERA’s Chief Low Carbon Fuel Officer, said long-term partnerships with reliable suppliers were essential to maintaining a resilient LNG portfolio amid market uncertainty.
The company has also secured long-term US LNG supplies, while growing North American exports offer Japan an alternative to cargoes transported through the Strait of Hormuz.
The disruption has already been reflected in regional gas prices. According to JOGMEC, the Japan-Korea Marker (JKM) spot LNG benchmark reached the high-$29s per million British thermal units (MMBtu) on 14 September, driven by Middle East tensions and competition for winter cargoes.
Prices subsequently eased to around $25/MMBtu towards the end of September as geopolitical risk premiums declined and inventories in Northeast Asia remained relatively comfortable.
European buyers face tighter LNG market
The disruption is also tightening the outlook for European gas markets, increasing competition for flexible LNG cargoes ahead of winter.
Tamas Varga, analyst at PVM Oil Associates, part of TP ICAP, said the conflict and resulting LNG export disruptions had set the scene for a tight winter, with Europe competing against Asian buyers for available cargoes.
“The Middle East conflict and the resultant disruptions in LNG exports set the scene for a tight winter, as Europe will compete with Asia for available LNG cargoes,” said Varga.
European gas storage was around 75% full, approximately 10 percentage points below the five-year seasonal average. While Varga said he did not anticipate a critical shortage, he expected prices to remain elevated, particularly if winter temperatures fall below normal.
Japan imported 4.99 million tonnes of LNG in August, down 6.9% year on year, according to preliminary trade figures cited by JOGMEC. More than one million tonnes came from the US, accounting for over a fifth of the country’s monthly imports for the first time.
