Japan perceives 'certain understanding' from US on predictable LNG supply at summit

Japan perceives it has gained a "certain understanding" from the US on the need of having predictable LNG supply for its energy security during a summit meeting in Washington April 10, a Japanese government official told S&P Global Commodity Insights April 11, after Tokyo voiced concerns over the US' LNG export permit pause.

"We see we have gained a certain understanding [from the US] over the importance of predictable LNG supply, which Japan sees significant for the country's energy security," said the official, referring to a joint leaders' statement.

The joint statement following the summit meeting between Japanese Prime Minister Fumio Kishida and US President Joe Biden said that the US "remains unwavering in its commitment to support the energy security of Japan and other allies, including its ability to predictably supply LNG."

The summit meeting took place as Japan has had expressed its concerns with the US over its pause of LNG export permits as a move possibly putting a damper on LNG investment.

The administration of US President Joe Biden said Jan. 26 that it will "pause" issuing key LNG export permits so that the Department of Energy can update its assessment of the impact of new terminals on the economy, climate change and national security.

The review centers on the criteria the DOE considers in deciding whether to permit projects to export LNG to countries that lack free trade agreements with the US. Such countries make up most of the global LNG import market, making the receipt of non-FTA export permits a critical step for major US LNG export projects to get commercially sanctioned.

The US' "temporary pause" on LNG export permits had raised some risks around supplies tightening after 2028, but US Energy Secretary Jennifer Granholm indicated at S&P Global's CERAWeek conference in Houston, Texas, in March that the DOE will end its permitting pause in early 2025.

Pending non-FTA LNG export applications at the DOE include the Venture Global CP2 LNG project, with which Japan's JERA and INPEX each have sales and purchase agreements to lift 1 million mt/year of LNG for 20 years.

In October, Kyushu Electric emerged as a potential buyer in talks over long-term LNG purchases and equity investment tied to Energy Transfer's proposed Lake Charles export project in Louisiana.

A Kyushu Electric spokesperson has confirmed that the Fukuoka-based power utility is considering lifting LNG from as well as an equity investment in the Lake Charles project, as well as other new US LNG projects.

Japan imported 5.525 million mt of LNG from the US in 2023, accounting for 8.4% of its total LNG imports as the fourth largest supplier, according to the Ministry of Finance data.