ABSTRACT
This chapter surveys the evolution of Japan's natural gas policy. Natural gas has played a very important role in Japan's diversification away from oil since the 1970s oil crises and has been a critical fuel source in replacing lost nuclear power in the aftermath of the Fukushima disaster. Japan's higher natural gas demand for power generation and a tighter Liquefied natural gas (LNG) global supply market over the past two years have led to a doubling in LNG prices in the Pacific basin, while the prices in North America have dropped. The chapter includes the adequacy of domestic natural gas infrastructure in order to meet demand growth, LNG pricing and continued reliance on oil indexation and the lack of regional cooperation. The share of Japan's spot and short-term LNG purchases from most Asia-Pacific suppliers has increased in recent years, mainly associated with debottlenecking exercises and Japan's additional LNG requirements after the Fukushima disaster.
