US pause on LNG export raises Japan’s concerns over new projects

The temporary suspension of U.S. export licenses raised Japanese concerns that the launching of new liquefied natural gas (LNG) facilities in the U.S. may be delayed, per a Reuters report citing Ken Saito, Japan’s industry minister statements on Tuesday.

With a 34 per cent increase in imports to 5.5 million metric tons last year, the U.S. became Japan’s fourth-largest supplier of super-cooled gas, accounting for 8 per cent of Japan’s total LNG purchases in 2023.

Moreover, Japan still depends on LNG for a third of its electricity mix, and the United States has been a major supplier, even though the country has gradually reduced LNG imports over the past ten years due to nuclear power restarts and renewable energy.

“Some Japanese companies have already concluded offtake contracts for LNG that is scheduled to receive approval and begin production in the U.S. Therefore, we are concerned that the temporary suspension of export permits will delay the start of new LNG production from the U.S.” Saito told a regular briefing.

“The measure in the　U.S.　does　not　affect　businesses　that　have　already　been　approved,　so　we　currently　believe that there will be no impact on LNG procurement by Japanese companies,”. He added

American officials stated the pause would not harm allies as it includes a national security exemption in case those countries require additional LNG.

Climate activists applauded U.S. President Joe Biden’s decision last week to halt approvals for applications to export LNG from new projects, which could push back decisions on new plants until after the election on November 5.