By Katya Golubkova and Yuka Obayashi
Japan will stress the importance of investment in natural gas, liquefied natural gas as well as cleaner fuels such as hydrogen and ammonia during its presidency of the G7 this year, a senior energy official said on Tuesday.
Japan, president of the rich-country grouping for 2023, will hold a ministerial meeting on climate, energy and environment in the city of Sapporo on April 15-16, ahead of the main G7 summit in Hiroshima city on May 19-21.
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 noted that Japan relies on super-cooled gas from Russia’s Sakhalin-2 project and would need at least several years to find a substitute.
Russia ordered a reshuffle of Sakhalin-2 shareholders, including Japan, in retaliation for Western sanctions for its invasion of Ukraine a year ago. Russia calls its intervention a “special military operation”.
Japan imposed its own sanctions on russia but still buys its LNG, getting almost 10% of annual LNG imports from Sakhalin-2.
With energy self-sufficiency at only 11%, the lowest level of G7 members, Japan sees a risk in becoming even more dependent on Russia if natural gas production prospects in the United States do not materialise, Soda said.
The Ministry of Economy, Trade and Industry plans to launch a so-called strategic buffer LNG (SBL) – similar to its strategic oil reserves, which are among the world’s largest.
It has yet to set out details on how it will secure supplies via short and long-term deals nor has it identified a company to handle LNG purchases.
In an emergency, the chosen company would sell LNG from the SBL to utilities to avoid supply disruption and the state company JOGMEC would step in to cover for any losses the company might incur, according to a presentation Soda made.
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, Atsunori Takeuchi, executive officer and senior general manager for Tokyo Gas’ LNG business, told the conference.
Also Read:
The U.S. Energy Department on Monday said it will lend Li-Cycle Holdings Corp USD 375 million as it builds a battery recycling facility in New York set to become one of the country’s largest sources of lithium by next year.