NHK reports that Japan is considering company support measures to long-term LNG contracts.

NHK reported that the Japanese government was considering measures to encourage companies to sign long-term contracts to purchase liquefied gas in order to guarantee a steady supply of this super-chilled fuel.

The public broadcaster, without citing any sources, reported that the measures included financial support to secure storage tanks in Japan as well as abroad, and a framework for companies to resell surplus supplies on the market. This would mitigate the risk of a surplus due lower than expected demand during the contract term.

About 30% of Japan's electricity is generated by gas-fired generators. After the Russian invasion of Ukraine, Japan, as the second largest LNG importer in world, faced increased energy security risks. This led to an increase in spot LNG prices, and consequently, higher electricity costs.

The public broadcaster stated that to mitigate these risks, METI is looking into measures to help Japanese companies commit to long-term LNG agreements, which could last up to 10 years, since LNG remains an important fuel source for Japan at the moment.

NHK reports that the METI will hold a discussion with energy experts about these measures on Wednesday.

NHK reported that the ministry intends to emphasize the importance of the government defining the necessary LNG quantities, and a government led initiative to secure LNG in case it is needed as an emergency. (Reporting and editing by Jamie Freed; Yuka Obayashi)

(source: Reuters)