Japan intends to focus on supporting Japanese companies’ involvement in LNG expansion projects in order to secure additional supply in a speedy manner, Minister of Economy, Trade and Industry Koichi Hagiuda said, as the country accelerates its efforts to reduce its Russian energy dependency.

“We intend to support Japanese companies on increasing their upstream investments and expansion of LNG lifting volumes by measures, such as providing risk money from Jogmec (Japan Oil, Gas and Metals National Corporation), mainly for existing LNG projects’ expansion that can produce additional LNG in a relatively short lead-time,” Hagiuda told a press conference.

Jogmec provides equity capital to Japanese companies’ oil and gas E&P projects to mitigate their financial risks as well as issues liability guarantees to support their finance for the upstream projects.

The state-owned organization also provides equity capital and liability guarantees for the midstream

LNG terminals and trans-shipment projects to secure stable LNG supply for Japan.

Hagiuda’s comments came as there are multiple LNG expansion projects being planned in the US, Australia and Qatar.

“In addition to such efforts, we will also immediately proceed with exploring what additional measures will be needed by taking into account the current state of the power and gas markets as well as the companies’ LNG procurements,” Hagiuda said.

Considering the scale of Japanese companies, which are smaller than foreign state-run companies and Western majors, “we believe in the need of the government coming to the fore and cooperating with the private sector in order to secure stable LNG supply,” Hagiuda added.

Eyeing control

The minister’s remarks come as Japan said March 31 it will consider ways for the government to enhance its involvement in the country’s LNG procurement as part of its emergency response to energy security concerns in the wake of Russia’s invasion of Ukraine.

During a policy meeting April 14, METI said it will make efforts such as urging gas producing countries to ensure stable LNG supply as well as support acquiring stakes in upstream to midstream projects and help alternative LNG procurements in the short-term as part of its policy response to the Russia-Ukraine crisis, according to documents presented at the meeting.

In the long-term, METI said the government will proceed with enhancing its involvement in the country’s LNG procurements and its control in order to be better prepared for a crisis in response to events such as LNG supply disruptions among other steps, according to the documents.

Japanese Prime Minister Fumio Kishida said April 8 that the country will impose a ban on coal imports in phases as part of additional sanctions against Russia following the latest commitment by leaders of the G7 nations, marking the country’s first commitment to curb any commodity imports from Russia.

G7 nations aim to expedite efforts to cut reliance on Russian energy, including phasing out and banning Russian coal imports and cutting Russian oil dependency, the leaders said in a joint statement April 7.

Russia was the second-largest thermal coal supplier and third-largest coking coal supplier to Japan in 2021, when it supplied 12% and 8% of the country’s total thermal coal and coking coal imports, respectively, according to finance ministry data.

Russia supplied 4% of Japan’s total crude oil imports of 2.48 million b/d in 2021, with the Middle East supplying 92% of the inflows, according to the data.

Russia accounted for 9% of Japan’s total LNG imports of 74.32 million mt in 2021, the country’s fifth-largest supplier, according to the data.

Marex Media