U.S.-produced LNG: Use Industrial Cooperation to Strengthen Japan’s Energy Security

Editorial

15:15 JST, October 9, 2025

The collaborative projects agreed upon during Japan-U.S. tariff negotiations are beginning to take shape. It is hoped that these projects are steadily advanced through thorough risk management while maintaining close communication between the two nations.

Under the Japan-U.S. agreement, a framework was established for Japan to invest $550 billion (about ¥84 trillion) in the United States. Japan also committed to energy purchases, including of liquefied natural gas (LNG), totaling about $7 billion annually.

The LNG development project planned by a U.S. energy company in the U.S. state of Alaska is expected to need $44 billion in investment, and Japan’s investment and LNG purchases are positioned as central to this effort.

Japan’s largest power generator, JERA Co., which was formed by the merger of the thermal power businesses of Tokyo Electric Power Company Holdings, Inc. and Chubu Electric Power Co., announced in September that it would consider procuring LNG from Alaska if it is produced there. This represents a positive first step in advancing industrial cooperation between Japan and the United States.

If JERA does decide to procure from Alaska, it would hope for shipments of LNG to begin in 2031 at lower prices than LNG from the Gulf of Mexico. JERA said it will consider purchasing 1 million tons of LNG annually for 20 years.

LNG, which emits fewer greenhouse gases than oil or coal, is an essential energy source for Japan, with demand expected to expand globally.

Japan relies on imports of LNG from Australia, Southeast Asia and the Middle East. The advantage of procuring the fuel from Alaska would be shorter shipping routes to Japan and less vulnerability to regional conflicts. Securing a stable supply from the United States, which is an ally of Japan, would also be significant for Japan’s energy security.

The challenge lies in properly managing project risks. This is because the cost of constructing new pipelines, which would stretch about 1,300 kilometers across Alaska, could swell to around $100 billion due to rising construction costs.

If expenses balloon, financial institutions affiliated with the Japanese government, as well as other entities that provide funding, could incur losses. Should increased costs be passed on to LNG prices to be purchased by JERA, it could lead to higher electricity rates in Japan.

It is crucial to proceed with the project with significant caution on the risk management front.

Meanwhile, it came to light in September that the U.S. government blocked a plan to shut down production at a plant of United States Steel Corp. under the umbrella of Nippon Steel Corp. It is believed that this was the result of the U.S. government implying it would use a so-called golden share, which grants it veto power over key management issues.

Considering the financial difficulties faced by U.S. Steel and its urgent need to improve production efficiency, the restructuring measures should be left to the initiative in the private sector.

In this new industrial cooperation between Japan and the United States, it is vital to pursue development in a mutually acceptable manner. The hope is that the United States will refrain from excessive intervention.

(From The Yomiuri Shimbun, Oct. 9, 2025)