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Released January 22, 2015 | PERTH, AUSTRALIA
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Researched by Industrial Info Resources Australia (Perth, Australia)--Geopolitical instability and declining oil prices are likely to cause Japan, the world's largest liquefied natural gas (LNG) importer, to obtain more LNG from neighboring Asian-Pacific countries like Papua New Guinea (PNG) and Australia, according to a report by Credit Suisse.
"We believe we are moving into a new phase, where the world's largest LNG off-taker will de-emphasize its recent focus on U.S.-linked LNG pricing and refocus on energy security, in light of the geopolitical risks concerning gas supply (U.S.-Russia) and marine disruptions in the South China Sea, which 60% of Japanese LNG currently passes through," the report said.
Countries like Australia and PNG are well-positioned to expand LNG exports to Japan. LNG exported from these countries avoids the South China Sea flashpoints that are concerning Japanese leaders and threatening the country's energy supply.
Ensuring a long-term supply of LNG is crucial for Japan. It has experienced lengthy delays in restarting the nuclear reactors that were closed after the 2011 Fukushima disaster. According to former Australian Resources Minister Martin Ferguson, Japan is "still very dependent on coal and LNG," because the country hasn't "got the reactors in as fast as we thought."
Japan's investment in INPEX's (Minato, Japan) $40 billion Ichthys project near Darwin, Australia, is evidence of the importance that Japan is placing on ensuring energy security. Industrial Info predicts that INPEX will export its first shipment of LNG from Ichthys by the first half of 2017.
Japanese Prime Minister Shinzo Abe's visit to Australia and PNG in 2014 was driven by his desire to strengthen Japan's LNG supply relationships. It is expected that Japan will soon adopt a policy of doubling gas volumes from Australia and PNG from 18 million tonnes per annum to 36 million tonnes to diversify risk. This could lead to an increase in Japanese investments in Asia-Pacific LNG projects, like the Ichthys Phase II expansion. According to Industrial Info, INPEX is expecting to reach a final investment decision on the Phase II expansion by the first quarter of 2019.
While slumping oil and LNG prices have posed a major roadblock to new LNG projects in the Asia-Pacific, many analysts are predicting that the prices will increase in the future. Japan's ambition to expand its imports from Australia and PNG will help offset lower prices and drive the expansion of the LNG industry in the region.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
"We believe we are moving into a new phase, where the world's largest LNG off-taker will de-emphasize its recent focus on U.S.-linked LNG pricing and refocus on energy security, in light of the geopolitical risks concerning gas supply (U.S.-Russia) and marine disruptions in the South China Sea, which 60% of Japanese LNG currently passes through," the report said.
Countries like Australia and PNG are well-positioned to expand LNG exports to Japan. LNG exported from these countries avoids the South China Sea flashpoints that are concerning Japanese leaders and threatening the country's energy supply.
Ensuring a long-term supply of LNG is crucial for Japan. It has experienced lengthy delays in restarting the nuclear reactors that were closed after the 2011 Fukushima disaster. According to former Australian Resources Minister Martin Ferguson, Japan is "still very dependent on coal and LNG," because the country hasn't "got the reactors in as fast as we thought."
Japan's investment in INPEX's (Minato, Japan) $40 billion Ichthys project near Darwin, Australia, is evidence of the importance that Japan is placing on ensuring energy security. Industrial Info predicts that INPEX will export its first shipment of LNG from Ichthys by the first half of 2017.
Japanese Prime Minister Shinzo Abe's visit to Australia and PNG in 2014 was driven by his desire to strengthen Japan's LNG supply relationships. It is expected that Japan will soon adopt a policy of doubling gas volumes from Australia and PNG from 18 million tonnes per annum to 36 million tonnes to diversify risk. This could lead to an increase in Japanese investments in Asia-Pacific LNG projects, like the Ichthys Phase II expansion. According to Industrial Info, INPEX is expecting to reach a final investment decision on the Phase II expansion by the first quarter of 2019.
While slumping oil and LNG prices have posed a major roadblock to new LNG projects in the Asia-Pacific, many analysts are predicting that the prices will increase in the future. Japan's ambition to expand its imports from Australia and PNG will help offset lower prices and drive the expansion of the LNG industry in the region.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.
