Japan, a major importer of energy commodities, plans to propose the creation of a global emergency reserve for natural gas, similar to the emergency reserve requirements for oil by the International Energy Agency (IEA), as the resource-poor import-dependent nation looks to avoid shortages and price spikes.
Japan is expected to propose a global emergency gas stockpile at a natural gas conference in Tokyo on Tuesday, sources with knowledge of the plans told Bloomberg on Monday.
While the EU has a collective target to fill gas storage sites to 90% by November 1 of each year, a target set after the Russian invasion of Ukraine, there isn't a global natural gas emergency reserve.
For the IEA members, which include most developed economies including Japan and the United States, each country has an obligation to hold oil stocks equivalent to at least 90 days of net oil imports and to be ready to collectively respond to severe supply disruptions affecting the global oil market. Countries have flexibility on how to meet that obligation-stocks can include stocks held exclusively for emergencies and stocks held for commercial purposes (both in the form of crude oil and as refined products), as well as holding stocks in other countries under bilateral agreements.
Japan's proposal for an emergency reserve of natural gas is similar to the IEA emergency oil stock requirements, according to Bloomberg's sources.
Last year, global natural gas prices surged to records after the Russian invasion of Ukraine and after Russia cut off gas pipeline supply to most EU countries. In August 2022, the benchmark European prices and the spot Asian LNG prices hit record highs as Europe and Asia competed for LNG supply ahead of the 2022/2023 winter.
Amid all these developments, Japan's trade deficit surged to a record high in August 2022.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com More