Japan signs new LNG deals to diversify natural gas supply

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Japanese firms have signed new long-term agreements to buy LNG from the United States and Oman as Japan looks to cater for its energy security and further diversify its LNG sourcing options.

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INPEX Corporation, the major gas firm in Japan, announced on December 26 a long-term Sales and Purchase Agreement with U.S. supplier Venture Global LNG for the purchase of one million tons per annum (1MTPA) of liquefied natural gas for 20 years. Under the agreement, INPEX Energy Trading Singapore Pte. Ltd. (IETS), a Singapore-based subsidiary of INPEX, will purchase 1 MTPA of LNG from CP2 LNG, Venture Global’s third project which is expected to commence construction in 2023.

“This agreement will enable the INPEX Group to procure LNG from the United States on a long-term basis, expand its LNG supply capacity, and diversify its supply sources to further contribute to the stable supply of energy,” said Hiroshi Kato, Executive Officer and Senior Vice President of Global Energy Marketing at INPEX.

In addition, Japanese companies, including Mitsui & Co, Itochu Corporation, and the largest power producer Jera, are set to sign deals with Oman to buy around 2 million tons annually from 2025 for 10 years, Japan’s public broadcaster NHK reported on December 27.

Japan and all other large importers of LNG in Asia have been in intense competition with Europe this year to procure gas cargoes as the EU races to replace Russian pipeline supply while Russia has significantly restricted its gas exports to Europe.

Japan is heavily dependent on imported energy for a lack of local resources. Amid the current crunch following the Russian invasion of Ukraine and the Western sanctions on Russia, Japan is giving nuclear power generation a second chance in a reversal of the stance Japanese leaders have had since the 2011 Fukushima disaster. Earlier this month, a panel of experts under the Japanese Ministry of Industry decided that Japan would allow the development of new nuclear reactors and allow available reactors to operate after the current limit of 60 years.