The Japanese and South Korean governments have been building a “gas empire” – partly to check Chinese influence in Southeast Asia – by massively investing in Australian gas to on-sell to other Asian countries, according to a new report.
In 2024 the Institute for Energy Economics and Financial Analysis (IEEFA) exposed Japan’s practice of reselling Australian gas to Southeast Asian countries while the cargos were still on the water.
It found that after the 2011 Fukushima incident, Japan locked itself into gas contracts to ensure its energy security but when nuclear assets began to come back online earlier than expected, demand began to fall and the country had more gas than it needed.
In the wake of the Russian invasion of Ukraine, when fears of gas shortages grew and prices on the spot market began to rise sharply, Japanese traders realised they could earn a significant profit re-selling Australian gas to third countries – though tariffs, the volatility of US President Donald Trump and a global gas glut may complicate this trade in the future.
The new report titled, How to Build A Gas Empire, is the first in a series by the Jubilee Australia Research Centre that examines the entire gas supply chain from its origins in Australia to its destinations in countries like Taiwan and Thailand.
Pulling together other research, the report outlines what it calls Japan and Korea’s “gas empire”, with the two countries pouring billions of dollars in public finance to guarantee the development of massive Australia gas projects and the infrastructure needed to move this gas offshore.
Much of this investment is state-directed using public money through export credit agencies to fill the vacuum left by private financial institutions that are increasingly refusing to lend to fossil fuel projects over concerns about climate, their reputation, and future stranded assets.
Though the Australian government formally stopped its own export credit agency, Export Finance Australia, from investing in new fossil fuel projects and enabling infrastructure in December 2024, it has continued to allow public investment from other countries into the country.
The report finds Japan and Korea contributed at least $20.5 billion to key Australian gas projects between 2008 and 2014, with just over two thirds – 64% – provided by Japan’s export credit agency JBIC. Where Japan’s investments tend to involve primary production, Korea’s investment has been more focussed on transport.
Dr Suhailah Ali, Director of Climate Justice at Jubilee Australia said Japanese and Korean public finance has been critical to projects such as Santos’ $5.8bn Barossa project off the far north coast of Australia that has been described by some critics as a “carbon factory with a gas field attached”.
“What really gets me is all the planned projects,” Dr Ali said. “There’s so much existing infrastructure, but there’s so much in the works. That’s what surprises me and scares me and adds to the urgency of the situation. We really can’t allow this to keep happening.”
“I’m from Fiji, from the Pacific. For us, there’s such a sense of urgency about climate change. We’ve been calling for a fossil fuel phaseout for a long time, so for Australia to be approving new fossil fuel projects and new gas projects in service to this gas empire, it is exasperating.”
Gavan McFadzean, climate program manager for the Australian Conservation Foundation which co-published the report, said the situation has been made worse by the “turf war” between China, Japan and Korea.
“There’s a bit of a turf war going on between Japan and China for primacy of the energy trade in Asia,” McFadzean said. “Japan’s doing this by really locking down their supply chains and investing in major projects in Australia.”
“While gas exports out of Australia are touted as necessary to keep the lights on in Tokyo and Seoul – that’s the argument that’s been propagated – what’s actually happening is the Japan and Australian governments are colluding to get more gas into Asia, to get new markets addicted to gas.
“Just as we’re supposed to be leading the transition away from gas, Japan is finding new ways to get gas into these markets to promote exports, long term.”
New gas developments have often been defended by Australian government figures and industry representatives alike by suggesting the fuel will displace coal and help decarbonise countries in Southeast Asia. Similar arguments have also been made by the governments of the US, Canada and Norway about their own exports.
A 2024 LNG Export Study published by the US Department of Energy – that remains on the departmental website found that US gas exports to Asia displaced more renewables than coal at a rate of two-to-one.
A report commissioned from the Commonwealth Scientific and Industrial Research Organisation (CSIRO) by Woodside Energy in 2019 similarly found Australia gas exports would prolong coal, displace renewables and increase emissions in Asia without a global carbon price. Though the report was buried, The Age and Sydney Morning Herald newspapers obtained a copy.
Efforts by the Australian government to act on climate change or to address domestic energy supply issues have often prompted Japanese and Korean government officials and industry figures to intervene in domestic Australian politics.
Last week West Australian Premier Roger Cook warned of “major trade concerns in Japan” over plans by the federal government to create an east coast gas reservation policy.
In March, Hitoshi Nishizawa, a senior vice executive from Japanese power giant Jera, told the Future Energy Forum in Perth that environmental regulations and rising costs could cost Australia “thousands of jobs, billions of dollars in lost revenue and weaken regional trade partnerships”.
Two years ago, in March 2023, Japanese ambassador, Yamagami Shingo, addressed an audience at the Inpex Luncheon that included Resources Minister Madeleine King and Trade Minister Don Farrell, their shadow ministry counterparts, Tania Constable, the head of the Minerals Council of Australia, Samantha McCulloch, the head of Australia’s oldest oil and gas industry association, Australian Energy Producers.
“Japan and Australia have grown – and continue to grow – together. You only have to look at the vibrant streets of Japan’s never-sleeping capital,” Shingo said.
“It’s hard to imagine the neon lights of Tokyo ever going out, but with Australia now supplying 70% of coal, 60% of iron ore, and 40% of Japan’s gas imports, this is exactly what would happen if Australia stopped producing energy resources.”
In July later that year, it was reported the Japanese government was actively lobbying Australia to give a new Northern Territory gas export hub an exemption under the safeguard mechanism.
Santos CEO and managing director, Kevin Gallagher, repeated similar themes in a speech to this year’s annual conference of the Australian Energy Producers, the country’s oldest oil and gas industry association.
Mia Watanabe, a campaigner with Fossil Free Japan, said the Japanese government treated Australian gas policy “like play-dough”.
“Japan’s ability to change it has become so easy, it’s like child’s play. It’s been moulded to serve the fossil fuel industry, not the climate nor our communities,” Watanabe said.
“Using diplomatic force to lobby the Australian government into building new gas projects, locking in decades of polluting LNG infrastructure and shutting out the renewable energy transition.
“This isn’t energy security – it’s a gas empire built on short-term profits at the expense of long-term, irreparable damage to the planet.”
