Japan is reportedly actively considering extending financial support to the US to boost liquefied natural gas (LNG) production. Incidentally, the US is already the world’s 3rd largest exporter of LNG behind Qatar and Australia. However, the country is set to play an even bigger role in global LNG production and export as the Russian market withers in the wake of the Ukraine crisis.
Japan and China Turning to the US
According to a report in Nikkei, Japan has been actively trying to reduce energy dependence on Russia following Moscow’s invasion of Ukraine. Of course, doing so would necessitate finding new supplies of oil, LNG, and multiple other commodities. The report added that Tokyo is turning to Washington to figure out ways to fill those gaps.
They are hardly the first Asian country to do so either. After all, China, Japan, and South Korea are the top buyers of LNG in the world. Since the start of the invasion on February 24th, Chinese buyers have signed several contracts with US suppliers. All in all, this will account for some 7.7 million tons per year in US LNG supply.
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China has already surpassed Japan as the world’s top LNG importing nation. However, due to the former country’s ongoing battle against COVID-19, China is currently looking to offload much of its LNG stock. Reports indicate that once the country tackles this latest round of the pandemic, it will return to its standard order quota.
Global LNG Supplies Shifting in the West as Well
Multiple European nations have also joined the effort to ditch Russian LNG in favor of a US-based supply. However, experts believe the US LNG export order book is already full. To meet new long-term demand, the nation will need to start investing in more plants and infrastructure immediately
This is where nations like Japan want to step in and help the US. By getting their new supplier up to speed, they hope to secure a constant flow of much-needed energy. In 2021, the US exported around 75 million tons of LNG. And with the additional demand, the country may end up moving up the ranks from the third-largest exporter to #1. The extra production units in Louisiana coming online will certainly help this.
But all is not lost for Russia, it seems.
Reports are coming in that India is purchasing large volumes of Russian LNG at heavily discounted prices. Indeed, according to The Times of India, Gujarat State Petroleum Corp. and GAIL India Ltd. recently bought several LNG spot shipments from Russia at prices well below prevailing market rates. This group is likely to continue to buy even more as long as Russian supplies remain cheap, further adding to market inconsistencies.
By AG Metal Miner
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