In a strategic response to upcoming expirations of key LNG contracts from providers like Russia, resource-scarce Japan is actively fortifying its long-term energy security by bolstering partnerships with close allies Australia and the United States. This proactive approach aims to ensure a stable and reliable supply of liquefied natural gas amid geopolitical uncertainties and disruptions in the global energy landscape.
Japan, the world’s second-largest importer of LNG behind China, heavily relies on this resource, which accounts for about a third of its power generation. Recent developments, including Russia’s invasion of Ukraine, have underscored the importance of diversifying supply sources to mitigate potential disruptions and safeguard the country’s energy needs.
One notable agreement that exemplifies Japan’s strategic pivot is the recent acquisition by JERA, Japan’s largest power generator, of a 15.1% stake in Woodside Energy’s Scarborough project in Australia. This investment is part of a series of deals aimed at securing reliable long-term supply sources in light of geopolitical tensions affecting traditional providers.
Despite a decrease in LNG imports last year, Japan remains committed to LNG as a crucial component of its energy mix, alongside efforts to increase renewable energy usage and restart nuclear reactors post the Fukushima disaster. Japanese LNG buyers have been actively engaging in equity deals and securing long-term offtake contracts in Australia and the U.S., ensuring a steady supply for years to come.
Political considerations, such as new carbon emissions regulations in Australia and U.S. policy shifts under President Joe Biden, have not deterred Japan’s pursuit of stable LNG supplies from these allied countries. Companies like Kyushu Electric Power are exploring opportunities to invest in LNG projects in the United States, emphasizing the importance of supply stability and strategic partnerships in ensuring energy security.
As Executive Officer Takashi Mitsuyoshi of Kyushu Electric Power noted, “North America and Australia offer greater supply stability compared to other regions, and their status as allies further enhances the reliability of these partnerships.”
Against the backdrop of evolving geopolitical dynamics and the imperative to secure long-term energy supplies, Japan’s strategic alliances with Australia and the United States signal a proactive approach towards enhancing energy security and resilience in the face of global challenges.