Japan could lose its pole position as the world’s top LNG importer to China as early as 2022, according to a new report by Wood Mackenzie.
Analysts expect that by 2022, LNG imports in Japan will decline 12 percent to 72.8 mmtpa compared to 2018, while China’s import volume rises 37.5 percent to 74.1 mmtpa.
The decline in Japanese imports will be driven by competition from coal, nuclear and renewables in the power sector and slow macroeconomic growth, said Wood Mackenzie’s Lucy Cullen.
While Japan’s LNG demand is declining, she said the country will remain the second-largest LNG consumer in the world until at least 2040, with demand still exceeding 60 mmtpa.
“Japan still provides ample opportunities for LNG sellers, particularly as existing contracts expire,” Cullen said.
Japanese buyers will continue to take a lead in contracting innovation with developments such as hybrid deals, coal indexation, joint procurement and carbon neutral cargoes, Wood Mackenzie said.