Japan gas utilities are at the forefront of the nation’s LNG policy, procuring long-term supply and actively acquiring LNG upstream assets overseas. Although LNG is considered a transition fuel on its path to net-zero, Japan expects to cut back on fossil fuel reliance by 2040.
Focusing on the top two gas companies, Tokyo and Osaka Gas, their LNG strategy has long-term implications for their credit profile and bond spreads. The companies’ shift towards upstream assets and trading surplus could impact the stability of their cashflows in the longer term. Bondholders of their long duration bonds should be aware of these risks.
