One factor is the increasing electricity demand driven by AI and tech industries. There’s also a pragmatic realization that renewables alone might not meet the energy requirements of new data centers and semiconductor plants. This creates a growth scenario for LNG, though it remains uncertain. In 2024, Japan’s LNG imports dropped by about 2.5% year-on-year to around 65 million tons. This gradual decline may continue, with imports stabilizing between 60 and 65 million tons annually, depending on further nuclear restarts and energy policy adjustments. If LNG demand remains stagnant at this level, the government’s energy transition plans may further emphasize renewables, hydrogen, and synthetic fuels.
Could Trump’s LNG policies make a difference to how Japan chooses its suppliers?
Japan will likely commit to additional US LNG volumes, especially with potential shifts in energy policy under Trump. However, this won’t significantly impact Japan’s existing long-term contracts, nor will it lead to a complete pivot away from Gulf suppliers. Instead, Japan will likely continue diversifying its LNG portfolio while carefully balancing geopolitical considerations. We may see some rebalancing. For instance, Japan has Russian LNG contracts coming up for renewal, and the geopolitical stance of the previous US administration discouraged buying from Russia. It’s unclear if Trump would maintain that stance. Australian LNG is another factor. As Japan’s dominant LNG supplier, Australia has also been exploring net-zero pathways and even discussed limiting exports. While those discussions have been toned down, Japan will likely continue diversifying its suppliers to ensure stability. It currently sources LNG from about 20 countries, but scale remains a key consideration. Gulf suppliers, for instance, can offer the large-scale volumes Japan needs, making them a crucial part of the equation. Ultimately, contract terms and flexibility will dictate these dynamics.