Grid Brief International: Japan’s Last Hurdle

Japan is a resource-poor island that has spent the last few years at the mercy of the LNG market to procure the super-chilled fuel—especially in its power sector. Last year, JERA, Japan’s largest power company, bought a seven-year record amount of LNG on the spot market—about 7 million mt. Why? In large part because of the outage at the Freeport LNG terminal that year; exactly the kind of scenario Japan would like to avoid, given that over a third of their electricity is supplied by natural gas.

But last month, a JERA executive said that this year it bought around 4.5 million mt of LNG on the spot market, a 35.7% drop. JERA’s been murky about why this drop has happened and about how much supply it intends to source from the spot market. Of course, Freeport isn’t fully back in the game yet, having sent out the second tanker since its outage just a few days ago. But does that matter? Japan has been trying to pivot away from LNG, so maybe something else triggered JERA’s decrease in spot market buys.

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