As Japan’s demand for liquefied natural gas (LNG) declines due to the restart of nuclear plants and the growth of renewable energy, Japanese companies are investing in regional gas markets across Asia to find potential outlets to sell their excess LNG supplies.
Japan’s LNG imports have fallen to their lowest level in over a decade, prompting companies to look to other Asian markets to offload the gas they had contracted during past market shocks, such as Russia’s invasion of Ukraine in 2022.
The Japanese government’s strategy is to maintain LNG handling capacity, including trade, at around 100 million tons per year by 2030 by building gas demand in Asia. This is driven by concerns over energy flexibility and security, as Japan wants to remain a major player in the global LNG market.
Japanese companies, led by JERA, Tokyo Gas, Osaka Gas, and Kansai Electric Power, are now stakeholders, feedstock providers, or participants in studies for more than 30 gas-related projects across Bangladesh, India, Indonesia, Malaysia, Myanmar, the Philippines, Singapore, Taiwan, Thailand, and Vietnam.
These investments include a 1.5-gigawatt LNG-to-power project in Vietnam by Tokyo Gas, the acquisition of a stake in an LNG regasification terminal in the Philippines, and the launch of a 1.8-gigawatt LNG-fired power plant in Indonesia by Marubeni and Sojitz.
The goal is to develop Japan’s own trading capability and create an Asia-wide gas market, which would help increase energy security and hedge the risks of LNG surplus as domestic demand declines. The government sees gas and LNG, along with renewables and energy conservation, as playing a role in Asia’s pathways to carbon neutrality.
In the fiscal year ending March 2023, Japan’s total LNG shipments, both for domestic use and exports to third countries, reached 102 million tons, demonstrating the country’s continued importance in the global LNG market.