Japan, S Korea agree to explore joint LNG procurement, cargo swaps

Japan's Ministry of Economy, Trade and Industry said Oct. 6 it has agreed with South Korea's Ministry of Trade, Industry and Energy to consider new initiatives among Japanese and Korean companies including JERA and Kogas to explore opportunities for joint LNG procurement and cargo swaps, among other initiatives.

The move serves as the starting point for a new LNG cooperation between Japanese and Korean companies, both ministries said.

Japan and South Korea, two of the world's major LNG importers, need stable LNG supply for energy security and for their pathways toward carbon neutrality.

"Even as we move towards carbon neutrality, the reliable supply of LNG remains crucial for ensuring stable energy supply in both countries," METI and MOTIE said in a joint statement released at the LNG Producer-Consumer Conference 2024 in Hiroshima. "Therefore, continuous and stable procurement of LNG continues to be necessary in terms of securing energy security."

Platts, part of S&P Global Commodity Insights, assessed LNG Japan/Korea at $13.229/MMBtu on Oct. 4, little changed for this year but well below the high of $84.76/MMBtu in March 2022 on concern of reduced supplies due to Russia's invasion of Ukraine.

"Based on the positive outcomes of this initiative, we envisage the signing of an arrangement between MOTIE and METI to further strengthen the cooperation relationship between both countries," they said.

JOGMEC, Eni

The METI-MOTIE agreement was among the highlights at the LNG-PCC in Hiroshima, where delegates agreed that LNG is a significant contributor to the energy security of net importing countries.

The LNG-PCC delegates also underlined the importance of understanding the role of natural gas and LNG for energy transitions to net zero emissions while recognizing various pathways.

On the front of gas security, the Japanese and Italian governments also announced their intention to sign a memorandum of cooperation in the near future following the confirmation of a comprehensive LNG cooperation based on action plans agreed at the heads of summit meeting in June.

In a related development, the Japan Organization for Metals and Energy Security signed an MOC with Eni with the aim of collaborating in the gas and LNG field to increase diversification of supply sources, according to an Oct. 6 Eni statement.

The memorandum aims to promote the role of gas and LNG in the energy transition, emphasizing the importance of achieving carbon neutrality in the context of economic growth and the protection of energy security. That includes LNG supply opportunities from Eni to Japan and the support of Japanese financial institutions to the Coral North project in Mozambique.