Australia could lose long-term LNG supply contracts with Japan under recent government policy changes over the past several months that appear to undermine the country’s natural gas industry.

Under the Australian Domestic Gas SafeGuard Mechanism (ADSGM) passed earlier this year, the government is allowed to divert liquified natural gas feedstock to meet domestic demand, and effective July 1, requires new LNG facilities to be carbon-neutral.

“Australia and Japan have worked together at the highest level to develop and support LNG, but now changing policies, new constraints and burdens are put in place,” Japan’s Institute of Energy Economics chief executive Tatsuya Terazawa told media this month in Tokyo.

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