Japan to encourage gas, LNG, hydrogen investment during G7 presidency


During its G7 presidency this year, Japan will emphasise the value of investing in natural gas, liquefied natural gas, as well as cleaner fuels like hydrogen and ammonia, a senior energy official said.

Prior to the main G7 summit in Hiroshima city on May 19–21, Japan, the grouping's president for 2023, will host a ministerial meeting on climate, energy, and the environment in the city of Sapporo on April 15–16.

Japan expects global energy markets to remain tight for years and it would "emphasise investment into natural gas, LNG, hydrogen and ammonia", Takeshi Soda, director of the Ministry of Economy, Trade and Industry's petroleum and natural gas division, told a conference.

Soda pointed out that finding a replacement would take at least a few years because Japan depends on super-cooled gas from Russia's Sakhalin-2 project.

In response to Western sanctions for its invasion of Ukraine a year ago, Russia requested a change in the ownership of Sakhalin-2, which included Japan. The Russian intervention is described as a "special military operation."

Japan continues purchases LNG from Russia despite its own sanctions against it; about 10% of its yearly LNG imports come from Sakhalin-2.

Japan sees a risk of becoming even more dependent on Russia if natural gas production possibilities in the United States do not materialise because it now has the lowest level of energy self-sufficiency among the G7 nations at 11%, Soda said.

A "strategic buffer LNG" (SBL) will be introduced by the Ministry of Economy, Commerce, and Industry. This LNG will be analogous to the country's strategic oil reserves, which are among the greatest in the world.

It also hasn't chosen a company to handle LNG purchases or provided specifics on how it will secure supplies through both short- and long-term agreements.

Based on a presentation Soda presented, in an emergency, the selected business would sell LNG from the SBL to utilities to prevent supply disruption and the state company JOGMEC would step in to compensate any losses the company would experience.

Atsunori Takeuchi, executive officer and senior general manager for Tokyo Gas' LNG business, told the conference that if LNG supplies from Russia are interrupted before the SBL can be established, Tokyo Gas, one of Japan's top LNG buyers, would buy from the spot market or its other long-term deals and may also ask customers to reduce consumption.

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