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The Japanese government is taking the unprecedented step of preparing to buy liquefied natural gas if companies can’t afford to do so. This move is designed to make sure the country has enough fuel for the winter, Bloomberg has reported, citing Japanese media.
Japan is heavily dependent on imported energy for lack of local resources. Amid the current crunch caused by Western sanctions on Russia, Japan is even considering giving nuclear a second chance in a reversal of the stance Japanese leaders have had since the 2011 Fukushima nuclear tragedy.
Now, to address the risk of a shortage of gas supply, the Japanese government will set up a framework for a state-owned company, the Japan Oil, Gas and Metals National Corp. to import liquefied natural gas on behalf of Japanese companies.
At the same time, Tokyo is also thinking about curbing demand. According to recent reports, the government is planning to institute consumption curbs on large energy users as a last resort. Before that it, it would ask households and business users to conserve energy.
It is because of its overwhelming dependence on imported fossil fuels - 90 percent of consumption - that Japan has not been able to join its G7 partners in completely giving up Russian gas. In fact, just this month, both Japan’s utility major JERA and Tokyo Gas sealed supply deals with the new operator of Sakhalin-2, where most of Japan’s Russian LNG supply comes from.
In the meantime, the government in Tokyo must also watch its energy import bill, which has been swelling in the past months as the prices of oil and gas, especially the latter, have gone up.
"A confluence of factors, including the higher fuel prices since the war and the tumbling currency, is putting a significant pressure on Japan's energy security, making this one of the most serious energy crises Japan has had," Jane Nakano, a senior fellow at Washington-based think tank the Center for Strategic & International Studies, said in July.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.