Japan’s JERA will boost its purchases of liquefied natural gas from the United States to up to 5.5 million tons annually, making up close to a third of its total LNG, up from 10% at the moment.
The move aims to reduce the Japanese energy company’s dependence on Australia in LNG supply, Reuters reported, citing the company.
The purchases will be made under long-term contracts, with deliveries starting from 2030. Half of the contracted amount, or 2.5 million tons annually, is part of non-binding agreements. The LNG producers involved in the deals include Cheniere Energy, Sempra Infrastructure, and Commonwealth LNG.
“When we can sell energy to our friends and allies, our great ally like Japan, so that they don’t have to buy it from our adversaries, that makes the world a more secure place,” U.S. Interior Secretary Doug Burgum said in comments on the news.
In Japan’s case, however, diversification is not away from a U.S. adversary. It is away from a staunch ally in the face of Australia, which has been the leading supplier of LNG to the island nation for very obvious geographical reasons. Recently, however, domestic supply problems have made Japanese LNG buyers nervous about future deliveries.
Of the 81 million tons of LNG that Australia exported last year, as much as 40% went to Japan. But Australia’s east coast has been suffering tight gas supply, which has become a hot political topic, with parties running in the latest elections, earlier this year, all prioritizing supply security for Australians in the east.
This, however, would mean less LNG for exports, which has spurred Japanese energy importers into diversification action. JERA specifically urged the Australians to make their LNG “more competitive”, per a Reuters report, citing a senior company executive as saying that U.S. LNG was about to get “abundant and cheaper” by the mid-2030s.
Source: By Irina Slav for Oilprice.com