Japan to Set Up LNG Trading Hub by Early 2020s

Japan’s Ministry of Economy, Trade and Industry on Monday said the country is planning to set up an international LNG trading hub by the early 2020s.

The announcement was made during a meeting of energy ministers from G7 countries in Kitakyushu. The meet was held on May 1-2, 2016 and was attended by ministers of Canada, France, Germany, Italy, Japan, the United Kingdom, the United States, and the European Commissioner.

According to the Ministry, there are three main reasons behind setting up a hub:

1)  to ease trading, mainly relaxation of destination clause,

2) have a price index that reflects Japan’s supply and demand and

3) facilitate LNG infrastructure, primarily measures that include allowing third-party access to LNG terminals, wide-area pipelines and underground storage facilities.

Japan is the world's largest importer of LNG and accounts for about one-third of the world's demand. With entry of US and Australia, the global LNG market is undergoing a significant change. Japan believes the trading hub  will help it to ably respond to changes in supply and demand and market conditions and help make stable procurement of LNG at competitive prices.