Japan encourages Australia to be cautious about gas market policy

Gas producers warned about stopping investments in case of implementation of long-term price limits proposed by the government. Japan asked Australia to think about its trading partners.

Australia supplies Japan with 40% of liquefied natural gas and 60% of coal. The written response from the Japanese Embassy in Australia to earlier raised questions contains Canberra's message to Tokyo. It says that there will be no influence on the country's supply by any interference in the market. And it urged the government to keep that promise.

Last week's announcement by Australia outlined the caps. The cap on domestic gas prices was 12 Australian dollars ($8.2) per gigajoule, and coal prices were 125 Australian dollars per ton for 12 months. This is a necessary measure to protect businesses and households from a sharp rise in world prices. The country noted that the restrictions will not affect long-term contracts, which export most of the LNG. Also, it was mentioned that there will be permanent control over prices and forced redirection of supplies to the domestic market.