HomeAsian NewsJapan will hand over the crown of LNG imports to China

Japan will hand over the crown of LNG imports to China

Tokyo-China is expected to surpass Japan to become the world’s largest LNG buyer. This is another sign of Beijing’s economic rise and Tokyo’s relative decline.

According to data from the analysis company Rystad Energy, China’s LNG imports this year are expected to be 75.5 million tons, slightly higher than Japan’s 75.1 million tons.

In the past half century, Japan has been a leader in global liquefied natural gas procurement. But the national market has matured and peaked. In the past few years, Japanese utilities and natural gas companies have shortened LNG contracts by smaller amounts.

At the same time, with the development of China’s economy, China’s transactions are also expanding, and some buyers have agreed to sign LNG contracts for more than ten years and huge imports.

Depending on how demand for air conditioning and heating fluctuates with the weather, China may not surpass Japan in a year or so. But China will surpass Japan sooner or later.

Reducing dependence on energy imports may be seen as a positive development, but it comes at a price. Giving up the top spot also means weakening of bargaining power in important energy markets.

For example, Qatar’s 25-year LNG contracts with seven Japanese power and natural gas companies will expire at the end of the year. In terms of volume, this transaction accounts for nearly 10% of the country’s annual LNG imports. However, due to the uncertainty of Japanese demand, the negotiation of the contract renewal was in trouble.

In 1992, the Gulf War had just ended, and Chubu Electric became the first Japanese utility company to agree to a long-term agreement with Qatar. Japanese trading company Mitsui & Co. and other investors bought a small number of shares in the LNG development joint venture.

These relationships put Qatar on the path to becoming a major LNG supplier. But Qatar is now interested in a more profitable customer.

“Qatar has not really provided Japan with good contract terms,” ​​an executive of a Japanese power and natural gas company said of the ongoing negotiations.

To make matters worse, Qatar Petroleum announced in March that it would not renew Qatar Gas’s No. 1 LNG joint venture, which includes Mitsui and Japanese trading company Marubeni, as well as the US and French oil giants Exxon Mobil and Dadao. Dar. Qatar Petroleum will become the sole owner in January.

A source close to the Japanese government said that Japanese trading companies are expected to provide LNG sales routes to Japanese utility companies, but now “Qatar is increasingly confident that it can develop and distribute LNG.”

At the same time, Tokyo encourages domestic companies to purchase resource rights overseas to ensure energy security. The goal is to increase the proportion of self-developed oil and natural gas to more than 40% by 2030.

But exiting investments, such as those in Qatar, may undermine Japan’s plans.

In the case of strong domestic market demand, it is essential to establish a leading position in the development and production of natural resources.

Now that the decarbonization trend has spread all over the world, LNG has become less certain. Japan is leading the way in developing ammonia as a next-generation fuel because this compound does not release carbon dioxide when burned.

Ammonia may become the fuel for global power generation between 2040 and 2050.

Mitsubishi Corporation is exploring Indonesia Clean Ammonia Project This will export fuel to Japan. The research was conducted in conjunction with Japan National Petroleum, Natural Gas and Metals Corporation, a state-backed agency.

Hiroki Haba, chief operating officer of Mitsubishi’s next-generation fuels and oil, said that “there is currently no global ammonia production company.” “It is vital for Japan to seize the lead in development and output while it is still possible.”

Japan began to import LNG and establish a supply chain in 1969. Natural gas began to replace oil in power generation as a source of natural gas supplied to households. This shift has also contributed to the growth of industries such as heavy machinery and shipbuilding.

At this new turning point in energy, ammonia may change the rules of the game and contribute to Japan’s energy security. It will be crucial to take full advantage of the lessons and expertise gained from more than 50 years of LNG work.

Source link


Most Popular

Recent Comments