Japan’s LNG dependence on the Middle East is approximately 20%, with Qatar being one of its biggest suppliers.
Ensuring a stable energy supply of liquified natural gas (LNG) was the main talking point between the Japanese prime minister and Qatar’s Amir Sheikh Tamim bin Hamad Al Thani on Tuesday, during the official’s trip to Doha.
The Qatari leader assured PM Kishida Fumio, who was in Doha this week for his first official visit since assuming office, that the Gulf country is ready to guarantee a steady LNG supply, reports said.
Both sides reached an agreement to expand their cooperative relationship beyond the economic sphere and include security aspects, with plans to enhance the frequency of discussions on defence and foreign affairs matters.
The global demand for LNG is on the rise as an interim measure until decarbonisation becomes feasible. Qatar possesses ample reserves and is responsible for approximately 20% of the world’s exports.
As a response to the ongoing Russian-Ukraine conflict, Japan and numerous other countries are seeking to reduce their reliance on Russian gas. Becoming even more of a viable option, Qatar has emerged as a promising alternative, leading to a race among nations to secure interests in its resource.
Qatar is currently working on two projects that are to be operational after 2026, both of which designed to increase its annual production capacity to 126 million tonnes, a 60% surge from the current level. This capacity would surpass that of the United States and Australia, both of which are current competitors of Qatar in LNG exports.
Given that acquiring interests in LNG resources is primarily carried out through private company contracts, Fumio’s objective is to support negotiations between Japanese companies and Doha by showcasing Japan’s strong backing for LNG as a vital energy source.
Japan is the largest LNG buyer in the world, importing 74,463,881 tonnes in 2020. Last year, Tokyo’s imports reached 71.99 million tonnes, overtaking China as one of the biggest importers of LNG.
Qatar is one of Japan’s biggest sources of LNG imports, alongside Australia and Malaysia. Japan’s LNG dependence on the Middle East is approximately 20%.
In February 2021, a contract was granted to a Japanese firm to undertake the development and construction of LNG plants as part of the North Field Expansion Project, a crucial element in Qatar’s growth and prosperity, the prime minister said.
Japanese companies, he added, have played a significant role in building essential infrastructure in Qatar, including the Doha Metro and Hamad International Airport. “I am very pleased that Japanese high-tech companies continue to contribute to the further development of Qatar,” Fumio said.
Previously, Japan encountered a setback in its LNG procurement from Qatar. Specifically, JERA, a joint venture between Tokyo Electric Power Co. Holdings and Chubu Electric Power, terminated a contract with Qatar for over five million tonnes per year in December 2021 due to expectations of declining demand in Japan.
Consequently, the supply of LNG from Qatar, which was the third-largest import source for Japan in fiscal year 2020, experienced a significant decline. However, the situation changed abruptly when Russia invaded Ukraine just two months later, underscoring the vital importance of LNG.
Through his visit, Fumio aimed to improve relations even further.
Ahead of his visit, the PM said Japan is keen on working alongside Qatar to transform possibilities into realities over the next five decades.
“Over the next 50 years, I would like to work with His Highness the Amir to turn these possibilities into a reality,” Fumio said during an interview with Qatar News Agency ahead of the planned trip.
After a May summit, the Group of Seven issued a statement emphasising “the important role that increased deliveries of LNG can play.”
Fumio shared with Sheikh Tamim that he successfully included the reference to LNG in the statement by persuading other G7 leaders. Initially, some members had reservations about mentioning LNG, a fossil fuel, as they feared it might contradict their commitment to decarbonisation, reports said.
‘Realistic transition’
In an interview with a Singapore-based outlet filmed during his Asia tour in August 2022, Qatar’s Foreign Minister Sheikh Mohammed bin Abdulrahman Al Thani said “energy will remain a very relevant, cleaner, and more reliable source for a longer period, because we see that it is the best alternative and the more realistic alternative towards transition”.
Speaking on the “energy poverty” crisis that has unravelled in the last few years, the foreign minister said “this was due to a lot of things,” adding that “the policies that have been adopted to transform to green in an aggressive way which sometimes is not realistic.”
In an interview with Sky News in late May 2022, Qatar’s Energy Minister Saad Sherida Al Kaabi noted that western powers must take responsibility. Years of pushing for an urgent end to fossil fuel production and calling gas producers the “bad guys” had contributed to the current crisis, he argued.
“There was a build up of countries pushing for the [energy] transition in a hard way. [They pushed for] net-zero, moving to renewables, doing away with fossil fuels and demonising the oil and gas companies, [calling them] the bad guys. And [as a result] you don’t have enough investment in the oil and gas sector,” Al Kaabi said, according to Sky News.
Separately, various other nations are also eyeing Qatar’s LNG opportunities. Major western oil companies like ExxonMobil and France’s TotalEnergies have become partners in projects.
