Investment in Australian LNG by Japanese companies underpins a pragmatic approach, which helps manage global disruptions and seasonal fluctuations in demand.
Myth
Japan is ‘profiteering’ from on-selling of Australian LNG.
Fact
86% of Australian LNG cargoes bought by Japanese companies are used in Japan.
Japan is a key investor in Australia’s gas industry
Japanese companies have been investing directly in Australian LNG projects since the 1980s. Without this investment, many gas projects would not have gone ahead, and Australia’s energy security would have suffered.
In return, Japanese investors receive reliable long-term LNG supply that is part of a focused strategy to maintain national energy security amid global uncertainty.
Anti-gas activists have claimed that Japanese companies are “profiteering” from Australian LNG by buying more than they need and on-selling at high prices.
Detailed analysis of Japanese purchases of Australian LNG from 2019 to 2025 show this is simply not true.
The real story about Japan and Australian LNG
Leading global energy and ocean transportation consulting firm Poten & Partners was commissioned by ANGEA to analyse all Australian LNG cargoes purchased by Japanese entities over this seven-year period.
The results were stark – and totally disprove misinformation being spread by activists.
Of the 3549 Australian LNG cargoes purchased by Japanese companies from 2019 to 2025, 3052 landed in Japan. This means that 86% of these purchases are being used in Japan to keep communities and industries powered and provide a key feedstock for essential industrial processes.
Therefore, it is completely false to suggest that Japanese companies are on-selling volumes of Australian LNG equivalent to more than half of what they import.
Additionally, Poten & Partners tracked diversions of Australian cargoes against spot market (short-term) LNG prices. This analysis found there was no pattern of diversions increasing during periods of high pricing.
In fact, the two variables had a weak negative relationship across the analysis period – diversions rose slightly when prices dropped. This is the opposite of what you would expect if “profiteering” was occurring.
Poten & Partners identified a number of operational reasons that would drive the small percentage of cargoes that were diverted.
These cargoes may simply have turned out to be surplus to real-time demand, which fluctuates seasonally and in relation to global events. They could have been involved in a cargo swap with a company in another country, to help both parties manage supply chains and optimise delivery timeframes.
Finally, a small proportion of LNG is purchased by companies that are traders rather than end users. These trading companies exist around the world, and their activities are an essential part of global LNG markets.
Explaining Japan’s LNG strategy
Japan started importing LNG for electricity generation in the 1970s to reduce its reliance on oil, which was subject to extreme price volatility and a major source of air pollution.
Japan quickly became the world’s biggest importer and LNG a major source of energy security. The country has very few energy resources of its own and does not have access to pipelines for natural gas delivery.
The importance of LNG to Japan’s energy security grew after the 2011 Fukushima incident, which took all nuclear power generation offline. Following this, Japan adopted a “buffer” strategy to LNG – investing heavily in international supply chains, aiming to ensure sufficient deliveries to manage both spikes in gas demand and disruptive global events (such as the 2026 Middle East conflict).
Japan’s 7th Strategic Energy Plan highlights importance of LNG to energy security and as a “practical means of transition.” It also notes the need to secure long-term contracts for LNG in the event that other energy-related technologies do not progress as hoped.
Japan’s first investments in the Australian gas industry came with the North West Shelf project in the 1980s. Since then, Japanese companies have invested in major projects such as Ichthys LNG, Gorgon, Wheatstone, Barossa and Scarborough.
These projects support domestic energy security for Australia, while providing thousands of jobs and generating significant economic benefits. Many of them would not be built without Japanese investment.
Japanese companies often have off-take agreements as part of their project investments, entering into long-term contracts to buy Australian LNG with take or pay provisions. This means a set volume of LNG must be accepted (or at least paid for) each year regardless of how short-term demand fluctuates in Japan. These cargoes are often committed to years in advance of delivery.
On-selling helps manage any instances of over-supply resulting from these long-term contracts and makes Australian LNG available to other nations in Asia, providing energy security and driving decarbonisation.
