World’s Largest Importer of LNG Japan likely to Consume More Gas

LNG carrier. Credit: Creative Commons/Wmeinhart

LNG carrier. Credit: Creative Commons/Wmeinhart

Japan imports about 35% of the global demand for LNG, or in other words, it imports 12.7 Bcf/day. The country’s LNG imports actually fell by 6.2% in the financial that ended March 31, 2016. With the declining population base and very slow predicted economic growth of the country, it is assumed that Japan’s incremental demand for LNG will be either flat or negative. The Japanese government estimates a fall in LNG usage by around 30% by 2030 from the 2014 peak.

Contrary to all beliefs imports of the liquefied natural gas (LNG) by world’s largest consumer of the chilled fuel, increased by 9.4% in August 2016, while compared year to year. Japan imported 7.72 million mt of LNG in August as per the official release by the industry ministry, also its coal imports specifically for power generation dropped by 16.6%. The EIA has forecasted that Japan’s LNG import will keep on rising by minimum 1% per annum. This is contrary to the predictions by the other experts in this field.

If we look at the present scenario of energy requirement in Japan, it is seen that the country has very limited domestic energy resources. These can meet merely 9% of its total primary energy needs. It has shut down its nuclear power plants in September 2013, following the tsunami and followed by disastrous accident at Fukushima in 2011. Prior to this, it could meet about 27% of the power needs by way of nuclear power plants. With this Japan has become the world’s largest LNG importer, second largest coal importer, and third-largest net importer of crude oil and oil products.

Japan at present depends on oil for about 45% its energy use, versus under 30% in the other developed nations, coal supplies some 30% of power, 12% of its electricity comes from oil, which is very high. Country’s policy makers are facing increased public criticism at home and abroad. There is a tremendous pressure on Japan to use less coal and oil from all over the world, in fact, is the highest amongst Asian countries. One thing is certain Japan can likely to switch over to the gas-fired power plant, as it has the most reliable, modern gas plants in the world; more than 40% of its gas power capacity is constructed since 2007.

At present about 70% of Japan’s LNG import is bought via long-term deals with specific destination clauses. And hence Japan is not able to resale it, which is a major problem for them. They can use this gas and cut down their emission levels very easily.

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