For decades, Australia has occupied a privileged place in Japan’s LNG strategy. It is relatively close, politically aligned, free of logistical chokepoints and has long welcomed Japanese capital. That trust pushed Australia’s share of LNG imports to almost 40%, but the easy-street days are receding.

The political and regulatory risks surrounding Australian gas exports are rising. Domestic gas reservation mandates, tougher emissions rules and increasingly assertive environmental and Indigenous legal challenges are injecting uncertainty into projects once viewed by Japanese buyers as predictable for decades.

Japan’s response has not been to retreat from Australia, but to dilute its exposure. Buyers are retaining a sizable foothold in Australian supply while expanding procurement elsewhere. Each region carries its own risks. Where once utilities could move away from suppliers with unattractive terms, the options are narrowing. Diversification no longer offers an escape; it redistributes exposure.

Against that backdrop, Australia remains indispensable, if no longer unquestioned. Japan can no longer search for a safe supplier. And Australia’s depleted gas fields could yet house the carbon released when that LNG is burned.