Japan is pushing for a stable and secure supply of liquefied natural gas (LNG) as uncertainty looms over Australia’s energy market policies. At the Financial Review Asia Summit in Sydney, Tatsuya Terazawa, chairman and chief executive of the Institute of Energy Economics in Japan, emphasized that Australia plays a critical role as a supplier of LNG to Japan and the wider Asian region.
The backdrop to these discussions includes a recent rebound in electricity demand in Japan, which has underscored gas’s importance as a fuel source. Terazawa stated that for Japan to ensure its energy security, Australia must also establish reliable energy policies. He stressed the need for Australia to adopt stable and predictable regulations, which are currently lacking.
Australia is recognized as one of the world’s top three exporters of LNG, a market that has been rapidly growing. Terazawa noted that Japan relies heavily on Australian gas to meet its energy needs, but there are concerns about the unpredictability of energy exports from the United States under the current administration.
In response to these challenges, Terazawa proposed several strategies that could strengthen the relationship between the two countries regarding gas supply. He specifically mentioned the need to enhance the Australian Domestic Gas Security Mechanism (ADGSM). This could involve enforcing a net contributor test for LNG projects, to be assessed annually by the Australian Energy Market Operator (AEMO). Such measures would ensure that LNG producers uphold their commitment to the domestic gas market while also fulfilling export obligations.
Additionally, Terazawa suggested the establishment of a national gas reservation policy and a Commonwealth export permit scheme. This permit system would require exporters to adhere to certain criteria to ensure a consistent supply for domestic consumers while facilitating international trade.
The call for stable energy policies comes at a crucial time as the dynamics of the global energy market continue to shift. Japan’s reliance on imported energy makes it imperative for the country to secure reliable sources, particularly as demand for gas continues to grow.
In conclusion, as discussions around energy supply continue, both Japan and Australia face the challenge of navigating a complex market landscape. The future of their energy partnership will depend on how effectively Australia can implement policies that align with Japan’s need for security and reliability in its gas supply.
