Japan studies a plan to limit the use of gas by large companies

Japan intends to establish a plan to allow a restriction order on the use of natural gas for large companies in the event of a sudden shortage, in an attempt to tackle fears about energy supply in the wake of Russia’s invasion of Ukraine, the Ministry of Industry as reported by Kyodo News.

The plan is part of the proposals compiled by a ministry panel on the same day to guarantee the stability of the energy supply. The Ministry of Economy, Trade and Industry intends to review the gas business law to establish the new scheme before demand recovers this winter.

The global liquefied natural gas market has become extremely tense as Europe has increased LNG imports to prepare for winter and braces for the risk of a supply disruption from Russia.

Germany, for example, has been forced to cut off Russian gas supplies after it, along with the United States and other countries, imposed sanctions on Russia. The US and other countries imposed sanctions on Russia in response to its aggression against Ukraine.

Japan, with scarce resources and the world’s second largest importer of LNG after China, followed the example of these countries, putting its energy security at risk.

Under the new framework, the Japanese government would step in and try to purchase LNG in the event gas companies were unable to buy the power.

The global liquefied natural gas market has become extremely tense as Europe has increased LNG imports to prepare for winter

The government plans to encourage gas savings in stages.

Japan wants the meeting of the G7 foreign ministers to be held in 2023 in Nagano

It will first ask households and businesses to cut back, and if that’s not enough, gas companies will urge their corporate customers to limit gas consumption. The government would end up issuing an order to limit the use of large companies in the event of a serious gas supply crisis.

Japan, with scarce resources and the world’s second largest importer of LNG after China, followed the example of these countries, putting its energy security at risk.

A similar framework has already been established to restrict electricity consumption.

The government will study the possibility of creating a points reward service to encourage households to conserve gas and electricity companies, which use gas to run thermal power plants, to share LNG reserves.

Last month, Russia established a new operator of the Sakhalin 2 oil and gas power project under a decree by Russian President Vladimir Putin. Japanese trading companies are involved in the project in the Russian Far East.

The Japanese government has said that the project is vital for the stable supply of LNG. Russia recently authorized investments by Mitsui & Co. and Mitsubishi Corp. in the project under the new operator.

Sakhalin 2 LNG accounts for about 9% of Japan’s total LNG imports.