Japan is a highly industrialized country with high energy usage. As of 2020, its primary energy consumption was dominated by oil and natural gas, accounting for 60.93%. The overall consumption of coal has reduced significantly in Japan over the last few years. At the same time, renewable energy sources and natural gas have projected an increase in their share of the total primary energy consumption.
In addition, Japan is one of the top natural gas consumers globally, with minimal production. The country is dependent on imports to meet most of its natural gas demands. Besides, the market competition, including minimizing natural gas prices for end-users, has led to utilities negotiating for natural gas import contracts with more flexible terms and lower prices. Also, the country is expected to continue its importing abilities’ expansion through expansion projects and new terminals.
Moreover, Japan has proactive foreign energy policies to diversity and secure its LNG imports. Also, the country is inclined to import less expensive and stable LNG supplies from the United States. Though the LNG imports have been on the decline, with a 6.7% decrease in 2019 from 2018. For instance, the total stockpiled imported volume in the first half of 2020 was the lowest since 2010. Additionally, energy sectors like electricity, LPG, city gas, and fuel oils witnessed less production due to the economic impact of the pandemic.
However, with increasing investments in natural gas and renewable energy sources, given the growing need to reduce carbon footprint, the market is evaluated to have growth opportunities.