Japanese energy companies are reportedly profiting by over $1 billion through the resale of Australian liquefied natural gas (LNG) to various countries amidst domestic shortages, as highlighted by recent research from the Institute for Energy Economics and Financial Analysis (IEEFA). This report emerges at a time when both Western Australia and eastern states are confronted with impending gas shortages.
Australia has become a significant supplier of LNG for Japan, accounting for 41 per cent of the country’s LNG shipments to third nations last year, surpassing the United States. The IEEFA found that in eastern and Western Australia, the volumes of LNG being resold by Japan exceed the anticipated annual gas shortfalls projected for these areas in the near future.
Amandine Denis-Ryan, CEO of IEEFA Australia, expressed concern regarding the state of gas availability in Australia, pointing out the paradox of the situation where the nation is contemplating LNG imports while Japan is profiting from large-scale resales of Australian gas. She commented, “It is quite extraordinary that Australia is now facing gas shortfalls on both sides of the country.”
The IEEFA’s analysis focused on examining shipping data and existing contracts to reveal the scale of Australian LNG being resold through Japan. The report estimated that last year, approximately 600 petajoules (PJ) of LNG was resold by Japanese companies, which is significantly higher than the 511 PJ consumed by eastern Australian states.
Furthermore, the majority of this resold LNG is directed towards high-value markets such as Taiwan and South Korea, which further underscores the lucrative nature of these transactions for Australian gas producers. Despite the evident gas shortage concerns, Japan has been resistant to any attempts by Australia to limit LNG exports, citing energy security as a significant factor in their stance.
In summary, the reselling of Australian LNG by Japanese firms signifies a considerable profit opportunity amidst local gas shortages, prompting discussions about Australia’s energy policy and export strategies in the face of emerging domestic demands.