Japan LNG long-term outlook 2019 Report

Commodity Market Report 09 July 2019

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While LNG demand is declining, Japan will remain the second largest LNG consumer in the world until at least 2040. As such, Japan still provides ample opportunities for LNG sellers, particularly as existing contracts expire.

What’s inside this report?

Japan is the world's largest LNG importer. However, by 2021 we forecast China will overtake it.

At the same time, Japan continues to take a lead in procurement innovation with developments such as coal indexation, joint procurement and carbon neutral cargoes.

This report presents our long-term view of Japan’s LNG market, and includes:

Supply and demand outlook through to 2040
An assessment of how contracts are changing, and how buyers will ensure long-term supply security
Updates on regas infrastructure, market structure and policy

How will the dynamics shift among the top 10 LNG importers out to 2040? Play the video to find out.

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Report summary

Japan LNG long-term market report, including details of the LNG supply-demand balance, regas infrastructure, contract developments, market structure and policy. Key highlights this update include: - Japan's LNG demand will decline but imports will remain above 60 mmtpa through 2040 - LNG to power demand is under pressure from coal, renewables and nuclear - As new contract volumes ramp-up and demand falls, Japan risks being overcontracted in the early 2020’s - Japan has been at the forefront of Asian contracting innovation with the removal of destination clauses from FOB contracts, more diverse contract formulae and indexation, shorter duration deals, joint procurement, and even procuring one of the world’s first carbon-neutral LNG cargoes in 2019 - As long-term contracts roll off from the mid-2020s, Japanese buyers will look to ensure supply security with new long-term volumes, while also incorporating some innovative contracting mechanisms

Contracting trends
Contract outlook
Short-term outlook (2019-2020)
- 2019
- Coal-to-gas switching
- 2020
Long-term outlook (2021- 2040)
- Power demand
- Nuclear outlook
- Non-power demand
- Residential/Commercial
- Industry
- Progress towards a liberalised gas market continues
- Energy security remains at the heart of Japanese energy policy in the post-Fukushima era