Why Japan Will Drive Global LNG Growth

There are countervailing arguments right now about the long-term impact of increased Japanese LNG imports on the commodity’s global market. Certainly in the wake of the 2011 Fukushima Daiichi nuclear disaster Japan has shifted heavily toward LNG as it has shut down all of its 48 nuclear reactors. The question is to what degree Japan intends to rely on this fossil fuel, and what other sources Japan will use to fill its energy gap.

A look at Japan’s LNG consumption since 2011 is instructive. Since then, Japanese use of LNG has increased by almost 20 million metric tons, or about 8 percent of global demand in 2013. The Wall Street Journal writes that this increased demand has led to more than 50 LNG export terminal proposals worldwide. However, despite surging demand for LNG in Japan (and China) recently, there are reasons to temper expectations. The Wall Street Journal speculates that a possible Japanese return to nuclear power and China’s staggeringly large new deal with Russia to import regular, piped natural gas should cause LNG speculators to hedge their bets somewhat.