Japan returns to long-term LNG deals on AI boom, national energy plan
TOKYO/SINGAPORE: Japan is back in the spotlight for liquefied natural gas (LNG) producers as the boom in artificial intelligence, rising costs for cleaner energy, and a new national energy plan drive appetite for long-term LNG deals.
While imports by China, the world's biggest LNG importer, are expected to fall this year, buyers in number two Japan are securing long-term supply deals again, including a potential landmark deal with Qatar.
Japan's LNG imports had fallen for a decade as nuclear power plants, idled after the Fukushima disaster, restarted and as renewable energy sources increased.
Data centres are expected to use enormous amounts of power to sustain the AI boom, while Japan's 7th Strategic Energy Plan in February identified gas as a realistic transition fuel for the nation's goal of zero net carbon emissions by 2050.
'We had expected that electricity demand in Japan would decline, but the growth of data centres is bending that curve,' said Yukio Kani, global CEO of JERA, the country's top power generator and LNG buyer. 'If we want quick solutions for data centres, Japan needs LNG.' Rising costs have also dimmed prospects for alternative fuels like hydrogen and ammonia.
'Until two or three years ago, we expected faster development of ammonia, but now we have to pause,' Kani said. 'So we've been shifting back to LNG.' Japan's Ministry of Economy, Trade and Industry (METI) forecast annual LNG demand would fall to 53–61 million tons in 2040 if it meets its emissions target, down from 66 million tons in 2024. But in a risk scenario, demand could rise to 74 million tons.
The new plan makes it easier for buyers to commit to long-term contracts. Japan has also been auctioning new gas-fired capacity to replace aging coal plants, awarding 7 GW in the past two years. LNG-fired capacity is projected to rise to 85.75 GW by 2034 from 79.98 GW in 2024.
Morgan Stanley sees Japan's LNG imports rising to 78 million tons in 2030 as gas-fired generation grows.
Osaka Gas signed a 15-year deal with Abu Dhabi's ADNOC. Kyushu Electric is set to sign its first long-term US deal. JERA signed four 20-year deals with US suppliers.
'Uncertainty remains,' said Tokyo Gas Chairman Takashi Uchida. 'The government presents multiple scenarios—there's no single outlook.' — Reuters
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Japan returns to long-term LNG deals on AI boom, national energy plan
TOKYO/SINGAPORE: Japan is back in the spotlight for liquefied natural gas (LNG) producers as the boom in artificial intelligence, rising costs for cleaner energy, and a new national energy plan drive appetite for long-term LNG deals. While imports by China, the world's biggest LNG importer, are expected to fall this year, buyers in number two Japan are securing long-term supply deals again, including a potential landmark deal with Qatar. Japan's LNG imports had fallen for a decade as nuclear power plants, idled after the Fukushima disaster, restarted and as renewable energy sources increased. Data centres are expected to use enormous amounts of power to sustain the AI boom, while Japan's 7th Strategic Energy Plan in February identified gas as a realistic transition fuel for the nation's goal of zero net carbon emissions by 2050. 'We had expected that electricity demand in Japan would decline, but the growth of data centres is bending that curve,' said Yukio Kani, global CEO of JERA, the country's top power generator and LNG buyer. 'If we want quick solutions for data centres, Japan needs LNG.' Rising costs have also dimmed prospects for alternative fuels like hydrogen and ammonia. 'Until two or three years ago, we expected faster development of ammonia, but now we have to pause,' Kani said. 'So we've been shifting back to LNG.' Japan's Ministry of Economy, Trade and Industry (METI) forecast annual LNG demand would fall to 53–61 million tons in 2040 if it meets its emissions target, down from 66 million tons in 2024. But in a risk scenario, demand could rise to 74 million tons. The new plan makes it easier for buyers to commit to long-term contracts. Japan has also been auctioning new gas-fired capacity to replace aging coal plants, awarding 7 GW in the past two years. LNG-fired capacity is projected to rise to 85.75 GW by 2034 from 79.98 GW in 2024. Morgan Stanley sees Japan's LNG imports rising to 78 million tons in 2030 as gas-fired generation grows. Osaka Gas signed a 15-year deal with Abu Dhabi's ADNOC. Kyushu Electric is set to sign its first long-term US deal. JERA signed four 20-year deals with US suppliers. 'Uncertainty remains,' said Tokyo Gas Chairman Takashi Uchida. 'The government presents multiple scenarios—there's no single outlook.' — Reuters
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