Japan warns that global competition for liquefied natural gas will intensify over the next three years because of underinvestment, Bloomberg reported.
Long-term LNG contracts that start before 2026 are sold out, according to a survey of Japanese companies by the Commerce Department. These types of contracts are important to buyers because they offer stable prices and reliable supply over many years.
Countries around the world are struggling to secure fuel supplies for power plants and heating equipment from major exporters such as Qatar and the United States, but there will be few new supplies until 2026, exacerbating the global fuel shortage.
This means importers will have to depend more on the volatile and expensive spot market, which currently trades at nearly three times the price of long-term contracts. According to the International Group of Liquefied Natural Gas Importers, about 30 percent of all LNG shipments last year were made through the spot market.
Japanese ministry officials and energy executives met to discuss LNG procurement plans. Japan is poised to become the world's largest LNG importer this year, and the fuel is the country's top choice for power generation.
The Commerce Department document said the lack of investment in LNG export projects means supplies will be very limited for years to come. According to the document, if Russian pipeline gas to Europe is completely shut off, the world could face a shortfall of 7.6 million tons of LNG in January 2025, equivalent to one month of imports to Japan.
Japan is taking steps to improve energy security by allowing the government to buy LNG on the spot market in case companies are unable to do so.