Japan’s LNG resales surge as domestic demand falls

Domestic LNG use rose slightly but is still about 20% below FY2018 levels.

Japan’s liquefied natural gas (LNG) resales to foreign markets hit record levels in fiscal year 2024, rising nearly 15% from the previous year, according to the Japan Organisation for Metals and Energy Security (JOGMEC).

Domestic LNG consumption edged up slightly but remains nearly 20% below FY2018 levels. With demand shrinking at home, Japanese energy companies and trading houses are increasingly selling LNG abroad. The JOGMEC survey shows 40% of LNG handled by Japanese firms is now exported, up from 16% in FY2018.

Japanese firms have lobbied foreign governments to support upstream gas production and LNG export projects, citing energy security. Research by InfluenceMap highlighted Japan’s role in boosting Australian LNG exports. In the U.S., Japanese officials opposed a pause on new LNG export facilities, arguing it could destabilise Japan’s supply.

“Whilst Japanese companies often insist that investments in new gas and LNG infrastructure bolster energy security, the rapid growth of external trade and falling domestic demand suggest that these investments are designed to expand fossil fuel trading opportunities overseas,” the report said.

According to a report by the Institute for Energy Economics and Financial Analysis (IEEFA), Japanese utilities are buying more LNG than needed at home and targeting South and Southeast Asian markets.

In 2024, Japan resold  $7.83b to $9.96 b (AU$11b to AU$14b) worth of Australian LNG, with profits likely exceeding $712 m (AU$1b). FY2024 resales exceeded Japan’s imports from Australia and Malaysia combined, and surpassed the total LNG output of Russia.

Nuclear restarts and renewable energy expansion will further cut domestic LNG demand. Tokyo Electric plans to restart the 1.35GW sixth reactor at Kashiwazaki-Kariwa in March 2026, displacing roughly one million tonnes of LNG demand. Another 1.1GW reactor is expected online by December 2026.

Despite falling demand, the Ministry of Economy, Trade and Industry encourages companies to procure 100 million tonnes of LNG annually and take stakes in overseas projects.

Japanese firms signed 10.5 MTPA of new sales and purchase agreements last year, mostly with U.S. producers, which allow destination flexibility.

In February 2026, JERA agreed to buy 3 MTPA of LNG from QatarEnergy through 2054.

Japanese companies have invested $10.8b in U.S. oil and gas production over the past two years. A U.S.-Japan trade deal announced in February 2026 includes $33b for 9.2GW of gas-fired power in Ohio.

“The role of Japanese gas and power utilities has shifted from purely end-users of gas to increasingly active LNG traders, putting them in more direct competition with other global suppliers,” the report said. “Declining global LNG prices could lead to lower profits for Japanese resellers.”

Falling global prices and rising U.S. feedgas costs threaten profit margins. JERA’s Fuel Business net earnings have dropped 46% since 2022, underscoring the financial risks of trading in an oversupplied market.

“Whilst some companies are hedging this risk by investing in US upstream gas and power segments, Japanese players intent on becoming LNG resellers may increasingly face the financial consequences of selling more LNG into an oversupplied market.”