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Japan announces $10bn investment into LNG

On Thursday 26th September 2019, Japan’s Ministry of Economy, Trade and Industry (METI) announced a further $10 billion investment into the LNG industry during the annual LNG Producer-Consumer Conference held in Tokyo, Japan. The investment will come from both public and private sectors and will be used to fund LNG infrastructure development such as LNG terminals, and power plants. A similar announcement was made during the 2017 conference, in which $10 billion was earmarked for investment into export projects in Canada and Mozambique.

The opening speech delivered by Mr Isshu Sugawara of METI highlighted Japan’s commitment as a pioneer of the LNG industry to lead its further development, through participating in infrastructure projects in Asia and training of LNG professionals to support the growth of the global market. 2019 also marked the 50th year anniversary since the first LNG cargo delivery to Japan.

The rise of the new LNG industry landscape

During the 2017 LNG Producer-Consumer conference, the focus was on how to promote the globalization of LNG trade amid a slowdown of final investment decisions (FIDs), to build the needed infrastructure and to develop a global flexible supply market. However, the context for the 2019 conference has changed. 2019 has already set a record for the greatest ever volume of new export projects taking FID, with more likely in the coming months . Many new contracts have increased destination flexibility too, and discussions now focused on how to increase the transparency of the market through development of hubs and reliable price indexes.

LNG has become an important source of energy globally, and the industry is focusing on how, along with renewables, it can continue to grow in line with the CO2 targets set at the Paris Accord. IHS Markit Chief Strategist for Global Gas, Michael Stoppard also presented at the conference demonstrating how natural gas and renewables together can be an important solution in the trade-off between power system costs and emission reductions. A poll question during the conference also indicated that more than a third of the participants believed environmental regulations will have the strongest impact on the growth of the industry. Another important factor for the LNG industry to grapple with is methane emissions, which can have a more damaging impact than carbon dioxide. Along with increased flexibility, the sustainability and credibility of the industry may lie in the transparency of its operation and effective communication of its mitigation measures.

Posted 03 October 2019 by Kaori Tachibana, Associate Director, Climate and Sustainability and

James Taverner, Research and Analysis Director



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