Key View
- Japan is expected to see a long-term decline in LNG imports, decreasing by an average of 2.5% annually over our forecast period, due to its strategic shift towards renewables and nuclear power in line with its decarbonization goals.
- Japan is bolstering its influence across the Southeast Asian energy market with strategic investments in LNG-power projects and facilitating Memorandums of Understanding (MoUs) for the resale of surplus LNG. This will enhance the market’s influence over Asia’s significant projected LNG demand growth.
- Moderately higher energy prices in 2025 may hamper Japan’s ambitions to stimulate demand in Southeast Asia, as high prices could weigh on regional consumption.
We maintain a bearish long-term outlook on LNG imports into Japan, driven by decarbonisation efforts in the power sector aimed at increasing the share of renewables and nuclear power. We anticipate that Japan’s LNG imports will decrease at an average annual rate of 2.5% from 2024 to 2034, with total consumption expected to fall to 73.0bcm by 2034. Currently, Japan is the world’s second-largest LNG importer, following Mainland China, primarily due to its lack of pipeline gas capacity and limited domestic gas consumption. This reliance on LNG is crucial for maintaining energy security. However, Japan’s energy policy is undergoing a significant transformation, focusing on decarbonisation and reducing fossil fuel dependence to achieve emissions reductions. This trend aligns with Japan’s Strategic Energy Plan, which aims to reduce gas dependency by 20.0% by 2030. The plan emphasises increasing the share of renewable energy and reconsidering nuclear power as essential components of its low-carbon initiatives. The government is actively pursuing these goals by setting ambitious targets to transition its energy mix, with nuclear power expected to contribute 20.0% of electricity needs by 2040.
Japan, historically one of the largest importers of liquefied natural gas (LNG), is taking strategic steps to boost regional competition in the LNG market. This move comes as a response to the gradually decelerating domestic demand for natural gas. With renewable energy sources gaining traction and government policies encouraging a greener energy mix, Japan’s traditional reliance on LNG has been shifting. Consequently, Japan is looking to leverage its well-established infrastructure to facilitate more competitive regional LNG trade.
In its bid to invigorate the regional LNG market, Japan is focusing on several key initiatives. The country is enhancing its LNG import facilities to accommodate a more diversified portfolio of suppliers, while also investing in developing smaller-scale LNG hubs across Asia. These hubs aim to provide flexible and responsive supply options that appeal to emerging markets in the region. By doing so, Japan hopes not only to stimulate competition but also ensure stable energy supplies at more competitive prices for neighboring countries.
Furthermore, Japan’s strategy involves deepening collaboration with regional partners to improve infrastructure and integrate supply chains. This collaboration includes sharing expertise and investing in joint ventures designed to optimize the efficiency of LNG operations. By serving as a catalyst for a competitive regional market, Japan is ensuring its energy security while supporting the broader transition to cleaner energy across Asia. As the LNG landscape evolves, Japan’s proactive measures are poised to redefine energy dynamics in the region.
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