Japan warned global competition for liquefied natural gas, It will intensify over the next three years due to lack of investment in supply.
Long-term LNG contracts starting before 2026 have been sold, according to a survey of Japanese companies conducted by the Ministry of Commerce and published Monday.
These types of contracts are a necessity for buyers, as they provide stable prices and reliable supply for many years.
Countries around the world are scrambling to secure shipments of gas to feed power plants and heating fuel from major exporters such as Qatar and the United States, but there is little new supply on offer before 2026.
Meanwhile, Europe is racing to replace gas through Russian pipelines with liquefied natural gas, as the global fuel shortage worsens, according to Bloomberg, and Al Arabiya.net reviewed it.
This means that importers will have to rely more on the volatile and expensive spot market, which currently trades almost 3 times higher than long-term contracts.
About 30 percent of natural gas shipments were sold through the spot market last year, according to the International Group of LNG Importers.
Japan is preparing to be the largest importer of liquefied natural gas in the world this year, as liquefied gas is the best option in the country for power generation.
The Japanese Ministry of Commerce document said that the lack of investment in LNG export projects means that supplies will be very tight for years.
And if the Russian pipeline to Europe is completely cut off, the world could see a shortage of 7.6 million tons of LNG in January 2025, equivalent to one month of imports to Japan, according to the document.
Japan is taking steps to ramp up energy security by enabling the government to buy LNG from the spot market when companies are unable to do so.