Importers of liquefied natural gas in Japan are bracing for the possibility that long-term supplies from one of the world’s top exporters could become uncertain.
Australians are heading to the polls on May 3 and, according to Reuters, whichever party wins, there may well be less LNG for exports than before the elections. Australia has been balancing on the edge of a domestic natural gas shortage because of its prioritization of exports, and this has turned into a major election issue in the run-up to the May 3 vote.
The current Labor government implemented gas price caps during its term, along with prioritization of domestic gas supply over exports. The measures raised the industry’s hackles, with executives warning it could compromise investment plans in new gas supply.
What’s more, Labor is firmly on the transition path, campaigning on the promise of billions in subsidies for solar, batteries, and anything else that could go towards reducing Australia’s carbon emissions. According to observers, this fixation on emissions could lead to unfavorable policies with regard to LNG even though the Albanese government has signaled it is pro-gas in the long run, if only as a backup for wind and solar.
Japan is the biggest buyer of Australian LNG. Japanese companies also hold stakes in LNG projects Down Under. Australia’s share of Japan’s overall LNG imports has grown in recent years, too, significantly. Japan used to import 18% of its total LNG from Australia in 2012. By 2023, that figure had grown to 42%.
Last year, a third of Australia’s total exports of liquefied natural gas went to Japan. That total stood at 81 million metric tons, per Kpler data cited by Reuters. Ahead of the elections, however, Japanese LNG buyers are considering supply diversification, “to ‘even out’ risk and to achieve its overriding goal of reliable, affordable and secure energy supplies,” according to the biggest buyer of Australian LNG, JERA.
By Irina Slav for Oilprice.com
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