Japan Chooses US and Australia as New LNG Suppliers... Accelerating 'Decarbonization'

Japanese Energy Company Increases Investment in Australian and US LNG Development
Member Countries of the Four-Party Security Dialogue 'Quad' (QUAD)

Japan is securing stable resource supply sources by signing long-term LNG (liquefied natural gas) supply contracts with the United States and Australia. This is interpreted as an effort to break away from the geopolitical risks posed by Russia, the existing supplier.

Major foreign media reported on the 11th (local time) that Japan, whose LNG supply contract with Russia will expire around 2030, is increasing its resource dependence on allies by choosing Australia and the United States as new resource suppliers. Japan is the world's second-largest LNG importer after China, and LNG accounts for about one-third of Japan's electricity production.

[Image source=Reuters Yonhap News]

Japan's largest power company, JERA, invested $1.4 billion (about 1.8655 trillion KRW) last month in Woodside Energy's Scarborough gas development project in Australia and signed an LNG supply contract for up to 1.2 million tons annually. In addition, Kyushu Electric Power, one of Japan's five major power companies, announced that it is considering acquiring a stake in the Lake Charles LNG project of the U.S. company Energy Transfer.

Major foreign media estimated that since 2022, Japanese energy companies have invested in five resource development projects in the United States and Australia, securing more than 5 million tons of LNG annually. This corresponds to 8% of Japan's LNG consumption last year and is said to be the world's largest resource supply contract.

The rise of Australia and the United States as Japan's prominent resource supply partners is largely attributed to the geopolitical risks posed by Russia. Foreign media pointed out that political risks from allies, such as Australia's carbon emission regulations or President Biden's freeze on LNG export license approvals, were less critical to Japan than the war risks posed by Russia.

Takashi Mitsuyoshi, Executive Director of Kyushu Electric Power, explained, "Although there are concerns about North America due to Biden's recent LNG export freeze moves, the United States and Australia are allies anyway," adding, "They still have an advantage in terms of supply stability compared to other countries."

Nobuoka Yoko, Senior Analyst in the Japanese energy sector at the London Stock Exchange Group (LSEG), said, "The international energy crisis triggered by Russia's invasion of Ukraine has made cooperation with allies important for Japan's energy security." Japan and the United States are G7 members and, along with Australia, participants in the Quad, a four-nation security dialogue.

David Bolling, former Deputy Representative of the U.S. Trade Representative Office in Japan, said, "Since G7 member countries cannot reduce their dependence on Russian LNG overnight, they need to gradually increase LNG supplies from allies."

This content was produced with the assistance of AI translation services.