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The Japanese government has asked the country’s LNG buyers to seek long-term supply deals as the G7 member heavily dependent on energy imports looks to enhance its energy security.
Japan’s Ministry of Economy, Trade, and Industry has urged the signing of long-term supply contracts during meetings with domestic LNG importers and foreign exporters, sources familiar with the talks have told Bloomberg.
Japan is thus looking to reduce its exposure to possible harsher sanctions on Russian LNG and fresh energy price shocks, according to Bloomberg’s sources.
Japan has been looking to boost its energy security and lower import bills amid volatile energy commodity prices and altered energy flows following the Russian invasion of Ukraine.
Earlier this year, Japanese Prime Minister Fumio Kishida visited the United Arab Emirates (UAE) during a trip in several Arab Gulf states to discuss energy and trade relations.
Japan is relatively late to the party of decades-long LNG supply deals.
In recent weeks, Qatar’s state giant QatarEnergy has signed 27-year LNG supply deals with European and Chinese companies to provide from 2026 cargoes from its expanded export projects currently under development.
Last month, QatarEnergy signed a 27-year agreement to ship LNG to Europe by agreeing to deliver cargoes for Eni in Italy beginning in 2026, after similar deals with Shell and TotalEnergies for supply to the Netherlands and France, respectively.
Qatar has also signed similar long-term deals with Chinese buyers, the latest being an agreement between QatarEnergy and China Petrochemical Corporation (Sinopec) for the North Field South (NFS) expansion project and supply of 3 million tons per annum (MTPA) of LNG from the NFS project to Sinopec’s receiving terminals in China over a span of 27 years.
The United States and Qatar are frontrunners – by a mile – as the LNG exporters best positioned to capture the global demand for additional supply capacity over the next two decades. That’s the estimate by Wood Mackenzie, which sees the abundant, low-cost natural gas resources in the world’s current top two LNG exporters as the key factor for their export capacity growth.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.