Japanese sentiment towards Australia’s LNG regulatory conditions has markedly improved but the nation will continue its supply diversification push, a senior industry figure says.
Japanese sentiment towards Australia’s LNG regulatory conditions has markedly improved but the nation will continue its supply diversification push, a senior industry figure has told Business News.
Tokyo Gas special adviser and past president Michiaki Hirose is in Perth to promote an upcoming conference and support a frigate contract bid in his capacity as Japan-Australia Business Cooperation Committee (JABCC) chair.
In a sit-down interview with Business News, Mr Hirose, who has worked in the sector since 1974, confirmed a trend that the world’s largest LNG consumer – Japan’s JERA – warned of in a candid speech to an energy conference earlier this year.
Though complementary of efforts by the government to improve Japanese business confidence in Australia, Mr Hirose confirmed LNG customers in Japan were looking to lower their reliance on Australian gas in the years ahead.
“Australian LNG is still number one,” he said.
“In terms of the imported amount into Japan, it is over 40 per cent, but if we look at Tokyo Gas, LNG from Australia assumes for than 50 per cent.
“Australian gas has been a very stable product for us, based on a very politically stable and stable quality that has brought about this situation.
“However, because of the heavy reliance on Australian gas, many energy companies in Japan are now looking at diversifying.
“That, I think, is a natural progression.”
Mr Hirose said the US was lobbying for more gas imports, while Canada and the Middle East were also seen as prospective markets from which Japan could diversify its LNG supply.
“How to balance the weight of these different exporters will be one of the major decisions of these energy companies,” he said.
The comments follow those of JERA LNG division senior vice president Hitoshi Nishizawa, who on a visit to Perth in March warned that Australia’s political instability on matters relating to energy could count against it when its existing share purchase agreements come up in 2030.
JERA has today signed a heads of agreement for additional LNG supply to support it through the winter months from 2027 for at least five years, from Australia’s Woodside Energy.
The deal is still to be fleshed out, but its intent is to support Japan through the coldest months when demand for energy is high.
Woodside is developing the Scarborough LNG project off the WA coast towards first production in 2026 but has also pressed go on the construction of its Louisiana LNG project, citing desires of its own to diversify into the northern hemisphere.
Its press release cited the impending delivery of Scarborough but did not confirm the North West gas project would be the source of the additional LNG cargo shipments.
Mr Hirose said the consumer actions of JERA, as the world’s largest customer for LNG product, would be felt around the world and not just within Japan.
But he scaled back the political rhetoric of JERA management – made in the lead up to the federal election this year – and said Japanese confidence had improved in Australia’s regulatory settings, acknowledging a policy “shock wave” through the country around three years ago.
“There has been a shift in the energy policy, which I believe happened sometime early last year, around spring in the Northern Hemisphere,” he said.
“[Federal Resources] Minister [Madeleine] King came to Japan and spoke to us about the government’s gas policy, and that has helped in alleviating and removing the concerns that we have.”
JERA was recently invited to join the JABCC, and Mr Hirose expects them to play “a big role” going forward.
The committee will co-host a conference in October.
Its visit to Perth includes meetings with government around Mitsubishi Heavy Industries’ bid to build the nation’s future defence frigate fleet.
