Sources from the Industry Ministry say that Japan will increase its LNG purchases as an emergency reserve in January.

Two sources from the industry ministry said that Japan, which is the second largest LNG importer in terms of volume, will begin buying liquefied gas on a regular monthly basis, rather than only at peak demand times, starting January. This will help to protect against supply shocks.

By strengthening the Strategic Buffer LNG program, which is run by the Ministry of Economy, Trade and Industry, at least one LNG shipment - approximately 70,000 metric tonnes - will be secured every month in order to reduce supply risks.

This means that Japan will purchase at least 12 LNG cargoes or 840,000 tons for its emergency reserves this year. That's up from 210,000 tons each of the last two years.

SBL cargos can be resold or used if there is no urgent situation. JERA retains SBL cargoes for 18 days prior to port arrival. The government will cover any resale loss, and profits must be returned.

As domestic demand falls, Japan expands its role as a LNG trader. It sells excess cargoes overseas during weak periods of local consumption.

JERA, Japan’s largest LNG buyer, and a SBL-certified supplier, purchased one cargo each for the three winter months of the last two winters, but it was never used.

According to a ministry source, JERA plans to buy SBL cargos at least once a month from January through December 2026.

According to the source, the utility will also be able to secure one cargo in December of this year.

METI announced last year that it would be increasing its purchases in the mid-to-late 2020s.

Japanese power utilities are calling for the expansion of the strategic cushion, which would allow JERA to provide a cargo to an utility that is facing an urgent shortage, protecting against disruptions caused by conflicts or nuclear reactor failures, among other things.

JERA confirmed that it had secured one cargo per each of the winter months for the last two winters. However, they declined to comment about future plans.

The United States asked Japan last month to cease imports of Russian Energy as part of its efforts to press Moscow to end the war in Ukraine. Japan's contracts with Russia's Sakhalin-2 project for long-term LNG supply cover about 9% its LNG imports.

Another METI source stated on Friday that "shifting to a monthly schedule is not directly connected to Russian energy matters, but it allows us to respond to any urgent situation." Due to the sensitive nature of the matter, the two METI sources refused to give their names. According to the International Energy Agency, Japan does not have underground storage for gas, but it has LNG storage capacities of about 12 billion cubic metres, or 9 million tons. This would be enough to store a month's worth of consumption at its receiving terminals.

(source: Reuters)