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GLNG COMMENTARY GLNG

government official told S&P Global that Tokyo importable volumes for importers including
will formally submit a response to Canberra as Japanese,” the official added. “Although the
fears mount that Australia’s gas security policy proposed revision notes protecting long-term
could compromise LNG trade practice and in- contracts, long-term contracts might not be
vestments. fulfilled if not enough export permissions were
“As Japan, we steadily request the Australian being issued or permits for fulfilling long-term
government to commit on protecting long-term contracts could not be obtained.”
[LNG contracts] as well as for energy security,” Indeed, the proposed ADGSM revisions
the official stated. “We are concerned the gov- have resulted in fractures beginning to appear in
ernment’s short-term market intervention could what had been a strong relationship surround-
possibly threaten [LNG] business practice, ing energy ties between Japan and Australia.
which has been established over many years, and Making matters worse is the fact that prior to
investments in the future.” the proposed revisions, energy ties between the
Japan relies heavily on Australia for LNG, two countries were on a path towards stronger
buying 43% of its imports in 2022 from Can- consolidation, with Japan’s imports of Austral-
berra. Among the proposed revisions, Japan is ian LNG up 15% last year from 2021 levels, with
most worried over the 45-day prior determina- 37 cargoes delivered from Australia to Japan in
tion of the mechanism made by the Minister of January 2023 alone.
Resources, which Tokyo argues would not give While ensuring domestic energy security has
Japanese companies enough time to purchase soared to the top of the agenda following Russia’s
LNG on the spot market. invasion of Ukraine, planned changes to Austral-
“In the event of companies finding needs to ia’s LNG exports policy could have unintended
procure spot LNG as an alternative plan, we see consequences of fracturing strong partnerships,
the period of 45 days insufficient for procuring discouraging investment in new projects, and
spot LNG as a counterplan,” the official said. put in jeopardy Australia’s reputation as a reliable
“This would increase uncertainty over LNG exporter. ™

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