Japan, the second-largest global purchaser of liquefied natural gas (LNG), is expressing apprehension about a temporary suspension of U.S. export permits potentially causing delays in launching new LNG facilities in the United States, as indicated by Industry Minister Ken Saito on Tuesday. Last week, U.S. President Joe Biden halted approvals for pending and future LNG export applications from new projects, a move applauded by climate activists. This decision may defer decisions on new plants until after the November 5 election.
Saito assured that the U.S. measure doesn’t impact approved businesses, alleviating concerns about LNG procurement by Japanese companies. However, he highlighted that some Japanese firms have already finalized offtake contracts for LNG awaiting approval and production commencement in the U.S. Consequently, there is worry that the temporary suspension of export permits might impede the initiation of new LNG production from the U.S.
Despite reducing LNG imports over the past decade with nuclear power restarts and increased renewable energy adoption, Japan still relies on LNG for a third of its electricity mix. The United States has emerged as a significant supplier, with imports surging by 34% last year to 5.5 million metric tons, constituting 8% of Japan’s total LNG purchases in 2023. The U.S. is now Japan’s fourth-largest supplier of the super-cooled gas.
U.S. officials have reassured allies that the pause won’t adversely affect them, citing an exemption for national security in case additional LNG is needed. Minister Saito emphasized the need to carefully assess the medium to long-term impact of the issue and take necessary steps to safeguard Japan’s stable energy supply.