Memorandum of Understanding for LNG Cooperation

Japan's Jera and South Korea's Korea Gas Corporation (Kogas), two of the world's largest liquefied natural gas buyers, have signed a memorandum of understanding to cooperate in LNG operations. The primary aim of this agreement is to strengthen energy security in both nations.

Areas of Cooperation

The collaboration will involve developing a framework to optimize LNG shipping and terminal operations. Specific areas include potential cargo swaps to enhance portfolio flexibility and logistical efficiency across their terminal networks. Jera stated that this closer operational coordination is driven by the large LNG demand in both countries and will enhance energy security.

Strategic Importance and Regional Context

Jera's global chief executive emphasized that closer cross-border collaboration among LNG-importing economies is crucial for strengthening supply resilience and supporting regional energy security. The company noted that market volatility, growing energy demand, and decarbonisation efforts have increased LNG's role in ensuring reliable electricity supply and complementing renewable energy sources. Both Japan and South Korea, as major LNG importers, have been significantly affected by the ongoing conflict in the Middle East.

National Import Profiles and Additional Measures

Japan is the world's second-largest LNG importer, with the Middle East accounting for 11% of its imports. Australia is its largest supplier, providing over 40% of total imports. Recently, Japan's industry minister asked Australia to increase its LNG production during a bilateral meeting. Meanwhile, South Korea has implemented temporary price caps on diesel, gasoline, and kerosene. Its Ministry of Trade, Industry and Energy has also explored securing alternative supplies, including potential volumes from overseas LNG projects in which Kogas holds equity stakes.