TOKYO, Sept 11 (Askume) – The Japanese government is considering support measures to make it easier to sign long-term liquefied natural gas purchase contracts to ensure a guaranteed stable supply of the supercooled fuel, the ministry of industry and commerce said on Wednesday.
At a meeting with energy experts to discuss fossil fuel purchases, Japan’s Ministry of Economy, Trade and Industry (METI) outlined potential measures, including financial support to secure storage tanks in Japan and abroad and a new scheme to assist in negotiating long-term LNG contracts with buyers.
The details are still being finalised, a department official said.
Natural gas power generation accounts for about 30% of Japan’s electricity generation. Japan, the world’s second-largest LNG importer, is facing greater energy security risks after Russia’s invasion of Ukraine, which caused LNG prices to rise, resulting in higher electricity costs.
To mitigate these risks, Japan’s Ministry of Economy, Trade and Industry is considering measures to assist Japanese electric and natural gas utilities in securing long-term LNG contracts, as LNG remains an important fuel source in Japan.
The move was first reported by NHK.
From an energy security perspective, the ministry is also considering creating an index to assess how much LNG Japan can buy and use based on its needs.
Other measures include a government-led initiative to ensure security of LNG in case of emergency, possibly through pre-determined agreements between gas suppliers and the government and payments to ensure supplies, ministry officials said.
At the meeting, Japan’s Ministry of Economy, Trade and Industry stressed the importance of diversifying crude oil purchase sources, as Japan depends on the Middle East for 95% of its oil.
The ministry also stressed that while the world is moving away from polluting fuels, there is still a need to ensure a stable supply of thermal coal.
Rapid divestment in upstream coal assets, particularly in developed countries, could lead to an imbalance in global supply and demand, the ministry said. Japan’s Ministry of Economy, Trade and Industry highlighted coal’s advantages, such as its low cost per unit of heat, and Japan’s need to maintain diversified energy sources.
