Australia and Japan will face both challenges and opportunities in maintaining a secure relationship in the changing LNG industry, according to sentiments expressed at the 45th Japan-Australia Joint Business Conference in Tokyo.

The prediction came from the Woodside Energy managing director and CEO Don Voelte as he addressed attendees at the event, with the relationship between the 2 countries playing a crucial role as Japanese utilities are the biggest supporters of Australia LNG projects.

While Japan is Australia’s biggest coal export market with sales of approximately $8.8bn a year and the second biggest uranium export market with 2,700 tpy, more than 88% of Australian LNG exports in 2006 went to Japanese markets.

Voelte commented, “Japanese sales contracts underpinned the development of the North West Shelf, and will continue to be the dominant destination for our product for at least the next 10 years.”

All LNG contracts for the Bayu-Undan project in Darwin, Australia are with Japan-based customers, while Woodside’s Pluto LNG project is based upon long-term contracts and equity partnership with Japanese customers Kansai Electric and Tokyo Gas.

Japanese utilities have often been prepared to move quickly to lock in LNG supplies, a key factor in the relationship as Voelte explains, “These utilities have historically exercised the ‘first-mover’ advantage which I spoke about last year. Other nations are now accepting what Japanese customers have known for some time: that in a seller’s market, it is the buyers who must move quickly to lock in supply.”

Woodside’s secure relationship with Japanese LNG customers has been considered crucial to the development of the company’s Pluto field offshore Western Australia. After discovering the Pluto field in 2005, Woodside officials quickly realised the potential for the company’s second LNG project.

Currently, 30 LNG plants across the world produce around 180 million tpy of LNG and almost 10% of worldwide gas consumption comes in the form of LNG. In 2015 worldwide demand for LNG is expected to grow to 380 million tpy, meaning producers will have to more than double output to meet this demand.

Naturally as demand grows, prices strengthen and the global drive towards clean fuels is also playing a major role in the rising price of LNG.