INTERVIEW: Japan hopes for 80% long-term LNG share post-2030, sees no issue with contracts beyond 2050

Japan hopes to maintain its current share of long-term LNG supply at around 80% after 2030, as it sees no issue with signing long-term LNG contracts extending beyond the 2050 carbon neutrality target under the country's new Strategic Energy Plan, a top official in charge of LNG policy told Platts, part of S&P Global Commodity Insights.

"Right now, it [Japan's share of long-term LNG contracts] is 80%. We believe that the reason we were able to suppress price fluctuations after the Ukraine crisis is due to the 80% long-term contracts in place," Yuya Hasegawa, director of the Ministry of Economy, Trade and Industry's Energy Resources Development Division, said in an interview Feb. 26, as the bulk of the country's long-term LNG contracts are set to expire around 2030.

"If there is little predictability, as seen in Europe, prices can fluctuate significantly during emergencies, which suggests that a considerable degree of long-term contracts is necessary," Hasegawa said. "If we are being conservative, I think having around 80% is preferable."

On Feb. 18, the Japanese cabinet approved the 7th Strategic Energy Plan -- the country's principal energy policy -- which designates natural gas as "an important energy source" even after achieving carbon neutrality in 2050 and emphasizes the need to secure long-term LNG contracts through a public-private partnership.

The move is welcomed by Japan's power and gas sector, with LNG's reassured position in the coming decades in the latest Strategic Energy Plan, after facing uncertainty over its demand in the 6th Strategic Energy Plan set in 2021, which had slowed the country's long-term LNG contracting activities.

When asked whether Japan's long-term LNG contracts could extend beyond 2050, Hasegawa said, "Yes, certainly. In effect, we believe [LNG] to be an important energy source even after achieving carbon neutrality."

Qatar LNG

Japan's assurance of LNG demand could be positive for securing a long-term and stable supply from Qatar, as the country's existing Qatari LNG contracts are set to expire around the end of the decade, with Kansai Electric's 500,000 mt/year contract ending in 2027, followed by JERA's 700,000 mt/year contract in 2028 and Tohoku Electric's 180,000 mt/year contract in 2030.

When asked about the prospects of securing Qatari LNG, Hasegawa said, "After all, I believe that Japan has not forgotten the debt of gratitude for being provided additional supply [by Qatar] right after the [2011 Great East Japan] earthquake."

"There are various long-term contracts [for Qatari LNG], whether they span for 27 years or 20 years, but the relationship between the countries is something that will last forever, right?"

Regarding whether Japan sees any issue with companies committing to Qatari LNG contracts extending beyond 2050, Hasegawa said the country does not see any issue "for sure, as far as we are concerned."

"Of course, the 27-year contract serves as one of the foundations," he added. "Major companies have already entered into 27-year contracts, and there are various others as well."

"Certainly, the importance of Qatar lies in the fact that discussions on individual contracts are for the companies to handle. However, I believe procurement from a country with spare supply capacity is extremely important," Hasegawa said.

The share of Qatari supply in Japan's LNG imports plummeted to just 4% in 2022, from 12% the previous year, after Japanese companies allowed a total of more than 7 million mt/year of Qatargas 1 LNG offtakes to expire in 2021, amid disagreements over contractual flexibility and uncertainty regarding Japan's future LNG demand due to its 2050 net-zero target.

Japan's Qatari LNG imports totaled 2.87 million mt in 2024, accounting for 4.4% of the country's total imports of 65.89 million mt, according to data from the Ministry of Finance.

QatarEnergy announced in February 2024 a new expansion of its LNG production capacity, with the target raised to 142 million mt/year by the end of 2030, from the 127 million mt/year planned by 2027 and 77 million mt/year currently.

Supply diversification

With the reassurance of LNG's role in the Strategic Energy Plan, Japan will continue working on diversifying supply sources for energy security as a natural disaster-prone country, Hasegawa said.

While acknowledging the advantages and challenges of each LNG supplier, Hasegawa said, "It is crucial to procure in a diversified manner, which contributes to a stable supply, especially in a country like Japan, which cannot be completely free from natural disasters."

"In this context, as the role of gas increases, I believe there is a trend toward diversifying gas procurement to ensure a stable supply," he added.

Alongside Qatar, Japan sees the US as an important LNG supplier, with significant expansion plans underway, Hasegawa said.

"Since both countries have plans for future expansion, I believe they are important supply nations. In this context, we believe it is our role to support companies in making decisions that are economically viable," he added.

US President Donald Trump said Feb. 7 that Japan "will soon begin importing historic new shipments of clean American liquefied natural gas in record numbers" and that the countries are in talks about an Alaskan pipeline, following a summit meeting with Japanese Prime Minister Shigeru Ishiba.

Trump signed an executive order Jan. 20 that called for prioritizing the development of the Alaska LNG project. The project would link Alaska North Slope supplies through a pipeline more than 800 miles long, estimated to cost over $10 billion, to an LNG export terminal in Nikiski on the Kenai Peninsula in southern Alaska.

If constructed, the 20 million mt/year terminal would provide a shorter shipping route to key demand centers in Asia compared with rival export projects on the US Gulf of Mexico.

When asked about the prospects of Alaska LNG, Hasegawa said, "They are geographically close. If it comes to fruition in an economically viable form, it could be beneficial for Japanese companies."

"The question of whether it is economically viable has been a topic of discussion for a long time. It will be interesting to see how this develops," he added.

Japan imported 6.34 million mt of US LNG in 2024, accounting for 9.6% of the country's total imports for the year, according to MOF data.