About this report
Leading global energy and ocean transportation consulting firm Poten & Partners was commissioned by ANGEA to analyse Australian LNG cargoes purchased by Japanese entities from 2019 to 2025. This work was undertaken to provide insights into the role that Australian LNG serves for Japan.
Key findings
The data showed that:
- Japanese companies were the biggest buyers of Australian LNG over this period – 3549 cargoes (or 36% of all exports)
- Of these cargoes, 3052 – or 86% – landed in Japan. Only 14% of cargoes were diverted to other countries
- There was no correlation between elevated spot prices for LNG and increases in on-selling of cargoes. In fact, there was a weak negative relationship between these two variables
- The analysis indicates operational factors were the major reason for cargo diversions.
What this means
Two main takeaways can be inferred from the analysis:
1. Activist claims that Japanese companies on-sell volumes of Australian LNG equivalent to half of what they import are false and misleading. Japanese companies use 86% of the Australian LNG they purchase.
Japan’s global strategy for LNG has been to retain a strategic buffer of supply for energy security, enabling management of seasonal demand fluctuations and supply chain disruption. The impact of conflict in the Middle East has shown this strategy to be very prudent.
Australian LNG is being used for energy security in Japan. It keeps communities and industries powered and provides a key feedstock for essential industrial processes.
2. It is also clear that Japanese companies are not “profiteering” from Australian LNG, as activists have claimed.
There is no pattern of cargo diversions increasing during periods of high pricing – data shows the opposite is often true.
Q&A about the report
Recent interruptions to global LNG supply from the Middle East as a result of the Iran War demonstrate why having a buffer is very prudent. Japan’s overarching strategy in acquiring LNG from across the world has been to retain a strategic buffer of supply for energy security. This ensures enough LNG is available to manage seasonal demand fluctuations, ensure reliable power supply if other sources such as nuclear are offline, and to adapt to changing global conditions.
Japanese companies have been investing directly in Australian LNG projects since the 1980s. Without this investment, many Australian gas projects would not have gone ahead, and Australia’s domestic gas supply and energy security would have suffered.
Japanese companies often buy Australian LNG on long-term contracts 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 real-time demand fluctuates in Japan. These cargoes are often committed to many years in advance of delivery. A small amount of on-selling helps manage instances of short-term over-supply resulting from these long-term contracts and makes Australian LNG available to provide energy security and drive decarbonisation in other Asian nations (including Korea and China).
Yes. The global and Asia Pacific markets for LNG have matured and become more liquid over the past 15 years.
The evolution of LNG markets includes the emergence of companies dedicated specifically to LNG trading. They operate around the world and have a similar function to oil traders, who have been operating for decades. LNG trading companies are now a core part of the market ecosystem and ensure gas – from Australia and other exporters – gets to where it is needed, when it is needed. These traders don’t just operate in Japan or even Asia, they are an essential part of global LNG markets.
Poten & Partners outlined a range of operational reasons for on-selling of Australian LNG cargoes purchased by Japanese entities. 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, the LNG could have been purchased by a company that is an LNG trader rather than an end user. As noted in the previous question, these trading companies exist around the world, and their activities are an essential aspect of global LNG markets.
Poten & Partners are energy and ocean transportation specialists, with access to highly granular data on LNG contracts, LNG loading and discharge reports, and ship locations. In this case, they have mapped the ultimate destination of more than 3500 Japanese-controlled LNG cargoes over a six-year period. They didn’t guess – they used a comprehensive dataset to understand LNG trade from Australia to Japan.
