Michiaki Hirose, the former chairman of Tokyo Gas, has highlighted the critical nature of Australian liquefied natural gas (LNG) supply to Japan, emphasizing that any disruption could have dire consequences for millions of people in the Tokyo metropolitan area.
Hirose, who now serves as a special adviser to Tokyo Gas, revealed that over half of the company's 12 million users in the Tokyo metropolitan area rely on LNG imports from Australia, making a consistent supply vital for the region's economic activities and daily lives.
These concerns are coming to the forefront as the Kishida government of Japan prepares for high-level talks with the Albanese government on energy security and investment. While Hirose refrained from criticizing Labor's energy and emission policies, he underscored the significance of Australian LNG in ensuring the uninterrupted supply of electricity in Tokyo.
Potential threat to energy security in Asia
In a related development, concerns have emerged among LNG producers in Australia who argue that the Albanese government's decarbonisation priorities do not adequately consider the rising demand for LNG from major Asian trading partners. They point to a discussion paper released this week by Resources Minister Madeleine King, which they believe downplays the role of Australian gas in enhancing energy security for Asian allies. Producers fear that this stance may reinforce the perception among Japanese gas buyers that Australia is gradually withdrawing from the LNG market.
The discussion paper also highlights policies to reduce domestic demand at a faster rate than supply declines to maintain market equilibrium. This approach is seen as unfavourable to export markets and has raised concerns that it may discourage investment and prompt customers to seek alternative sources of gas, potentially impacting local projects.
Furthermore, the LNG sector in Australia is under continuing pressure from the courts, with the recent stalling of Woodside Energy's Scarborough project due to a Federal Court ruling overturning approval for seismic testing. Offshore gas operators are pushing for urgent reforms to petroleum approval regulations after this ruling.
In March, Japanese energy giant Inpex warned that Australia's domestic policies on gas and climate posed a threat to regional security in Asia due to potential risks to energy supplies. Japan's largest power generation company, JERA, has also expressed similar concerns.
Hirose's comments serve as a reminder of Japan's increasing reliance on Australia for energy resources, particularly in the face of concerns regarding Labor's emissions reduction requirements, market interventions, and LNG export control reforms. These issues are expected to be discussed during the upcoming high-level talks between Japanese and Australian officials, underscoring the importance of ensuring stable and secure energy supplies between the two nations.