INTERVIEW: Japan‑Australia energy ties deepen as partnership enters security phase

Nearly 700 delegates from Japan and Australia are expected to gather in Chiba over Oct. 4-6 to explore areas to deepen cooperation, including in energy, as the bilateral relationship between the two countries enters a new, security-focused phase.

"The timing is particularly significant. The war began on Feb. 28, and the Strait of Hormuz was closed. In the broader context of economic security, energy security has become an issue that is receiving tremendous attention," Michiaki Hirose, chairman of the Japan-Australia Business Co-operation Committee, told Platts, part of S&P Global Energy, on Sept. 30.

"Against that backdrop, one major objective of this conference is to reaffirm that Japan and Australia will continue to maintain strong ties in the energy sector," Hirose, currently senior corporate advisor at Tokyo Gas Co. Ltd., where he previously served as president, CEO and chairman, said in an interview in Tokyo ahead of the 63rd Annual Joint Business Conference between the Australia-Japan Business Co-operation Committee and the Japan-Australia Business Co-operation Committee at Makuhari Messe.

"I would like this year's gathering to become a 'Chiba Conference' that will be remembered for years to come — a conference that leaves a lasting legacy," Hirose said, as this year marks the 50th anniversary of the Basic Treaty of Friendship and Cooperation between Australia and Japan.

"There are many issues to address, but after 50 years, we are entering the next 50 years, and energy will remain indispensable," Hirose said. "At the same time, Australia wants to expand the bilateral relationship beyond energy into areas such as critical minerals, telecommunications, digital technologies and defense. Japan needs to respond appropriately to those aspirations."

The annual conference, which dates back to 1963, follows a summit between Japanese Prime Minister Sanae Takaichi and Australian Prime Minister Anthony Albanese in Canberra on May 4, during which the two leaders issued several joint statements, including on energy security. Takaichi described the relationship as having reached a level that could be characterized as "quasi-allies."

"This conference is the first one since the two leaders issued joint statements in May, so naturally we should build upon it as the two leaders have established a broad framework," Hirose said.

"What I hope is that participants discuss what can actually be achieved, and perhaps what cannot be achieved... Our role and mission as a business conference is to translate those commitments into concrete actions in the private sector," he added.

Australia LNG

Since Japan began importing LNG from Australia in 1989, Australia has become its largest supplier. Imports totaled 25.811 million metric tons in 2025, accounting for 39.7% of Japan's total LNG imports, according to data from the Ministry of Finance.

The growth in dependence on Australian LNG is largely due to Australia's stability, Hirose said, adding that this stability has attracted substantial investment from Japanese utilities and trading companies.

"Another is what we now call 'chokepoints.' LNG shipments from Australia do not need to pass through locations such as the Strait of Hormuz or the Strait of Malacca," Hirose said. "Cargoes can simply sail north from Australia's west coast. From a maritime security standpoint, that offers significant advantages."

Hirose said potential LNG supplies from the US West Coast, including Alaska, are essentially destined only for Japan.

"In contrast, there are countries such as the Philippines and Indonesia between Australia and Japan," he said. "Therefore, cooperation among Japan, Australia, ASEAN countries and Pacific Island nations could create interesting LNG opportunities that may actually be more attractive than those offered by the US West Coast."

Such larger regional frameworks and partnerships would naturally increase flexibility in LNG supply, Hirose said, adding, "There is definitely potential there."

"If there are LNG-consuming countries along the shipping route, there are various possibilities for cooperation as a package," he said.

Asked about the prospects for Australian LNG supply, Hirose said, "Supply stability is strong. Australia still has abundant gas resources."

"Frankly speaking, nobody really knows how much gas exists between East Timor and Australia's west coast," he added.

Policy concerns

However, Hirose said member companies of the Japan-Australia Business Co-operation Committee are concerned about Australia's series of policy developments, such as the Domestic Gas Reservation Scheme and the Safeguard Mechanism.

During a meeting with Australian Ambassador to Japan Andrew Shearer on Sept. 29, Hirose said he told the ambassador that "member companies of the Japan-Australia Business Conference have expressed strong concerns" about these policy developments.

"To Australia's credit, the government has followed a very careful process, holding briefings, conducting stakeholder consultations, seeking public comments and revising proposals where necessary," Hirose said.

The Australian government unveiled its Domestic Gas Reservation Scheme exposure draft on Sept. 10, proposing to reserve up to 20% of gas exports for domestic use, with the draft setting a ceiling rather than a fixed mandate.

The Domestic Gas Reservation Bill 2026 will establish Australia's first national Domestic Gas Reservation Scheme. The exposure draft builds on design features proposed by the government earlier this year.

The draft reflects some flexibility in or softening of plans, even as the government maintains its commitment to ensuring affordable gas for domestic households, businesses and industry.

Under the draft plan, the license application process will begin on Jan. 1, 2027, with the Domestic Supply Obligation starting on Jan. 1, 2028, to align with industry contracting cycles, the government said.

Asked about Japan's concerns over the implementation of the Domestic Gas Reservation Scheme, Hirose said, "The biggest concern among Japanese member companies is declining predictability and increasing uncertainty."

"As you know, LNG projects are extremely long-term investments and are indispensable energy sources... Companies need a reasonable degree of confidence about the future. If uncertainty becomes excessive, investment decisions become difficult, and users cannot enter into contracts," Hirose said.

"It is fine to create new systems, but we would like to see flexibility in the design," he added. "There needs to be some predictability regarding the range of possible outcomes."

The Japan-Australia Joint Statement on Energy Security Cooperation, issued after the May 4 summit, said, "We recognize the complementarity of our trade and economic partnership and the interdependence of our energy security, we are committed to our two-way trade in energy resources and strengthening supply chain resilience, while also addressing unjustified import and export restrictions."