How Will Japan’s Outlook for LNG Impact Global Markets?

November 2, 2021|LNG

"LNG in BC Conference" by BC Gov Photos is licensed under CC BY-NC-ND 2.0

By approving the sixth iteration of the Basic Energy Plan on Oct. 22, Japan has cemented its medium to long-term policy shift away from coal and gas in power generation in favor of renewables. That strategy will likely cause a major impact not only on Japan’s purchases but also on the global LNG industry as a significant part of global LNG supply may need to look for a new home.  

The new Plan charts a trajectory for LNG’s share of the power mix to fall from 37% in 2019 to 20% in 2030. Based on 2019 import numbers and government data, that would free up a volume that’s equivalent to 6.6% of global imports, or close to India’s total imports in that year.

If Japanese power and city gas consumption remains around the 2019 level, then the country’s LNG imports would drop to around 50 million tons in 2030, just under 10% of the forecasted global demand. The ratio was at 22% in 2019.

So far, Japanese officials in charge of oil and gas say that rather than curtailing purchases on the global market, the nation’s companies will buy more cargoes come the end of the decade. Such confidence suggests Japan sees LNG playing a major role in Southeast Asia’s energy developments over the course of the decade. Perhaps it also shows a belief that natural gas will remain relevant well into the future. 

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