The Japanese JERA Co. Inc. said on Monday that it has signed a memorandum of understanding (MOU) with Korea Gas Corp. (KOGAS) to explore liquefied natural gas (LNG) collaboration, citing supply challenges from the Ukraine war.
“Under this MOU, to ensure the stability of LNG supply, JERA and KOGAS agreed to discuss opportunities for mutual cooperation in the LNG business, including LNG exchanges, trading, ship optimization and the exchange of market views,” JERA said in a press release. .
“Russia’s invasion of Ukraine has created a severe energy environment, such as reduced pipeline gas supplies to Europe, and uncertainty regarding global energy supplies is increasing dramatically,” he noted.
Japan regained its position as the world’s largest LNG importer last year, the International Energy Agency (IEA) said in its gas market report for the first quarter of 2023. It ranked that spot from at least 2015 to 2019, according to a 2020 IEA report. This forecast that the world’s third-largest economy would hold that position until 2022, after which it would be overtaken by China.
South Korea was the second largest importer in 2015 and 2016, overtaken by China from 2017 to 2019, the IEA said in the quarterly report. He predicted that South Korea would be the third largest importer of LNG from 2019 to 2025.
“Japan and Korea’s combined LNG import bill rose 80 percent to nearly $115 billion, while LNG imports declined 2 percent compared to 2021,” said the AIE.
Dependency of Russia
Japan imported 71.998 million metric tons of LNG last year, according to data from Japan’s Finance Ministry. The country bought 6.869 million metric tons of LNG from Russia and 4.136 million metric tons from the US in 2022, ministry data showed. It imported 6.567 million metric tons from Russia and 7.07 million metric tons from the US in 2021, according to ministry data.
Japan is expected to untie Russian energy following a pledge by the Group of Seven (G7), of which it is a member, in response to Russia’s invasion of Ukraine.
The G7, which also includes the US and the UK, has pledged to eliminate “our dependence on Russian energy, including by eliminating or banning the import of Russian oil.” The group, however, did not impose a timetable, opting instead to achieve a phase-out “so as to give the world time to secure alternative supplies”.
In a context of uncertainty in global energy supply induced by the conflict, “JERA and KOGAS, which are among the largest buyers of the global LNG market, will strengthen their strategic relationship and consider developing cooperation schemes regarding their supply and demand for LNG, to improve stable energy supply in Japan and Korea,” JERA said in the MOU announcement.
Positive outlook for LNG
In the long term, JERA sees an opportunity in “accelerating the energy transition towards a carbon-neutral future”.
“LNG will play an even bigger role as a transition energy not only in Europe but also in Asia,” he said.
JERA said that “to ensure a stable energy supply in Japan, JERA will continue to work together with LNG buyers and other leading companies both inside and outside Japan, such as KOGAS, as it seeks to improve purchasing capabilities.”
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