European and Asian Focus on US LNG Supply Security

Major LNG players TotalEnergies and JERA elevated supply security concerns at the World Economic Forum in Davos last week. Despite declining Japanese and European LNG offtakes, their demand remains a significant market force, heavily dependent on US supply. TotalEnergies' CEO sought President Trump's assurance of uninterrupted US LNG flows, while JERA's LNG head emphasized higher portfolio diversification toward US sources to enhance Japan’s energy security.

JERA, Japan's largest LNG buyer handling between 30-35 million metric tonnes (mmt) annually, plans to increase the share of American LNG in its portfolio, according to reporting by Reuters from the World Economic Forum (WEF) in Davos. As Japan's primary utility, JERA told Reuters it would seek a shift in procurement strategy by creating a more geographically balanced portfolio.

Portfolio realignment

JERA currently sources nearly half its LNG from the Asia Pacific region, with long-term US supplies comprising only 3.2 million tonnes of their annual purchase volume. JERA's head of LNG division, Ryosuke Tsugaru, told Reuters that this high regional level of exposure was undesirable and would need to be addressed to improve supply security. The company expects the market to be "kind of balanced" from 2026 to 2029, effectively constrained by expected project delays and growing energy requirements.

Domestic criticism

Concurrently, also at WEF, TotalEnergies CEO Patrick Pouyanne raised concerns about potential domestic price impacts of expanded US exports and sought assurance from US President Trump that the flow of US LNG to Europe would remain uninterrupted. The US LNG export capacity buildout of the past decade has attracted repeated criticism from domestic interest groups with assertions it would inflate energy prices for US consumers and lead to excessive environmental harm. Shortly before last year’s presidential election, former US President Biden imposed a permitting moratorium on new LNG projects.

Demand trends

It should be noted that LNG demand in Japan and Europe is currently on a downwards trend – Japan’s since 2018 and Europe’s since 2023. Notably, Japan’s LNG demand reduction has happened very gradual over the past five years whilst Europe has seen a more substantial year-on-year drop following a peak in 2022 in the wake of Russia’s invasion of Ukraine. Still, European LNG offtakes exceeded 100mmt last year whilst Japan took in roughly 66mmt, according to our data. Declining demand notwithstanding, these volumes demonstrate the importance of LNG as an energy carrier for both Europe and Japan even as both have made efforts towards energy diversification and efficiency gains.

Energy needs

This demand reduction notwithstanding, international attention comes as both Asian and European buyers are evaluating the security of their portfolios, whilst US domestic power requirements – just like Japan’s and Europe’s – is expected to rise, particularly driven by data centres and AI infrastructure.

The permitting situation remains complex. Whilst Trump has directed the Department of Energy to resume considering LNG export applications after the previous administration’s permitting moratorium, the extended period for comment on environmental studies suggests immediate approvals are unlikely. The process of installing new capacity typically requires extensive regulatory review, environmental impact assessments, and infrastructure development, which can take several years from approval to operation.