OPINION : “Lessons in Gas and LNG Governance: ‘Deliverability’"

There is one term that I believe deserves greater attention in discussions about the future of LNG: "deliverability."

Until now, whenever we discuss LNG supply security, our attention has almost always focused on one question: How much LNG is available? How many MTPA of global LNG capacity exist? How much additional production will come from Qatar and the United States? How many new projects will come onstream? How many cargoes have already been contracted?

However, in his presentation at The 5th IndoPacific LNG Summit 2026, organized by the Indonesian Gas Society (IGS) in Bali on July 20–22, 2026, Koichiro Shoki of LNG Japan Corporation offered a different perspective.

The title of his presentation was provocative in itself: "Beyond Supply: Deliverability and the Reordering of Global LNG Markets."

The message was essentially this: Having LNG does not necessarily mean that the LNG can reach us. And in my view, this represents one of the most important changes in global LNG governance today.

Supply ≠ Deliverability

In its presentation, LNG Japan illustrated this paradigm shift in a very simple way. Previously, the logic was:

Contract Signed → LNG Shipped → LNG Arrives.

A contract meant there was supply. Supply meant that LNG would be shipped and delivered to the buyer. But today's LNG market is no longer that simple.

A contract may already be in place, but the LNG may not necessarily arrive. Cargoes can be canceled, diverted, or delayed. Even when LNG eventually arrives, its commercial or technical conditions may not be suitable: wrong timing, wrong price, wrong specification.

Therefore, according to LNG Japan: "The real constraint is no longer molecules, but deliverability."

This statement is important because the LNG challenge is no longer simply about whether gas molecules are available in the world, but whether those molecules can actually reach the buyers who need them.

What Is "Deliverability"?

LNG Japan provided an interesting definition. LNG can only be considered deliverable if it can reach: the right place, at the right time, under the right conditions. Therefore, deliverability is not merely a matter of volume.

In its presentation, LNG Japan identified at least six factors that determine whether LNG is truly deliverable.

First, Physical Capability.

Production and liquefaction facilities, shipping capacity, receiving terminals, storage, and the capability to receive LNG must all be available.

Gas may be available in reservoirs, and LNG may be available at production terminals, but without sufficient vessels or receiving infrastructure, the LNG still cannot reach its users.

Second, Contractual Flexibility.

Contracts must provide sufficient flexibility regarding delivery destinations, pricing, transferability, and other commercial terms. In rapidly changing market conditions, overly rigid contracts can become an obstacle.

Third, Geopolitical Risk.

Conflicts, sanctions, disruptions to shipping routes, and access-related risks can alter delivery capabilities within a very short period.

Fourth, Commercial Agility or Portfolio Capability.

Companies with more diversified portfolios of suppliers, markets, vessels, and contracts have greater flexibility to conduct cargo swaps, optimize shipping routes, and reallocate cargoes.

Fifth, Policy and Regulation.

The domestic policies of producing countries can determine whether LNG continues to be exported or is redirected to meet domestic demand.

Sixth, Fiscal and Tax Regime.

Tax policies and investment incentives influence investment decisions in LNG projects, which ultimately determine future supply availability. Thus, deliverability is not simply a shipping issue.

It is the result of interactions among: infrastructure + contracts + geopolitics + portfolios + policies + investment.

LNG Japan even emphasized that deliverability is shaped as much by sovereign decisions as by market forces.

The World Is Changing

Why is this concept becoming increasingly important today? Several global developments are simultaneously increasing LNG deliverability risks.

First, disruptions to Qatar's infrastructure, which, according to the presentation, highlight the physical vulnerability of supply. Second, rising tensions in the Middle East, particularly because the Strait of Hormuz remains a critical chokepoint for global LNG flows. Third, disruptions in the Red Sea have forced vessels to change their routes. The consequences include longer sailing times, higher freight costs, and greater delivery uncertainty. Fourth, the Russia–Ukraine conflict and sanctions continue to reshape global energy trade patterns.

The message is clear: Supply may exist, but access is no longer guaranteed.

LNG may be available. However, access to that LNG is not necessarily assured.

From "Supply-Driven" to "Deliverability-Driven"

This is the paradigm shift in the LNG market that I find particularly interesting.

Under the old paradigm, additional global LNG capacity was expected to automatically create a market surplus, which would then increase LNG availability, lower prices, and create more arbitrage opportunities.

Theoretically, this makes sense. However, new variables have now emerged.

Additional LNG supply must navigate geopolitical risks, followed by shipping and logistics constraints, and then potential policy and regulatory interventions. Each of these stages can result in deliverability losses.

Consequently, an increase in nominal LNG production capacity does not necessarily translate into an equivalent increase in LNG effectively available to a particular market. Effective supply may be smaller or delayed, allowing market conditions to remain tight and price volatility to remain high.

In other words: Nameplate LNG Supply ≠ Effective LNG Supply.

This is a very important distinction.

Global LNG Markets Are Becoming Increasingly Regional

There is another equally interesting consequence.

For years, the LNG market has been evolving toward a global market. LNG can move from one region to another in search of the best prices. However, LNG Japan sees an emerging trend in the opposite direction: the regionalization of LNG markets.

Rather than operating as one global LNG market, the market is beginning to move toward several regional systems:

Atlantic Basin – Middle East – Asia Pacific.

This regionalization could reduce arbitrage opportunities, increase dependence on specific shipping routes, and widen price differentials between regions. This means that the world may have abundant LNG in aggregate.

However, LNG available in the Atlantic Basin may not necessarily be able to immediately address LNG shortages in Asia from an economic and logistical perspective. Once again: availability is not necessarily deliverability.

The Dilemma Facing Producing Countries

There is another issue that is particularly relevant to Indonesia. LNG-producing countries face a dilemma between LNG export expansion and domestic energy security. Expanding LNG exports requires substantial capital investment, generates economic value, and typically depends on long-term contracts.

However, governments also have a responsibility to ensure that energy remains available and affordable for their own populations. This has led to various policy instruments, including domestic reservation policies, export restrictions, and regulatory interventions. And this brings us to three interesting examples presented by LNG Japan: Qatar, Indonesia, and Australia.

Qatar: Reliable Supply, but Still Exposed to Geopolitical Risks

Qatar is one of the world's most competitive LNG producers. The country has a strong track record in long-term contracts and a highly reliable LNG supply base.

However, even Qatar is not entirely free from deliverability risks. Most of Qatar's LNG exports depend on geopolitical stability and strategic shipping routes, particularly the Strait of Hormuz.

Therefore, LNG Japan's message is particularly interesting: "Even the most reliable supplier depends on fragile external conditions."

Reliability in production does not necessarily mean reliability in delivery.

Indonesia: When Domestic Priorities Change LNG Allocation

The second case is Indonesia.

LNG Japan observes that rising domestic energy demand can lead to adjustments in LNG allocation and export timing. The LNG Japan presentation even referred to the experience of declining production at Badak LNG in Bontang as a reminder that upstream constraints can result in supply shortages.

The key message was: "Supply is reallocated based on domestic priorities."

This is highly relevant to Indonesia. Indonesia has an interest in generating foreign exchange earnings and maintaining the confidence of international LNG buyers. At the same time, domestic gas demand for electricity, industry, fertilizer production, and other sectors continues to increase.

Therefore, Indonesia's future LNG management cannot focus solely on how much volume can be exported. It must also consider the balance among domestic energy security, export commitments, upstream sustainability, and investment attractiveness.

Australia: Secure Today, but Not Necessarily Tomorrow

Australia provides a different example. Existing export contracts are relatively stable, but its domestic policies are evolving.

The LNG Japan presentation noted a planned 20% domestic supply obligation on Australia's East Coast beginning in July 2027, applicable to new or uncontracted volumes.

Western Australia also has a domestic supply framework of approximately 15%, which was reportedly under review. The consequences extend beyond LNG volumes. Policy uncertainty can affect investment confidence. And investments made today determine LNG supply five, ten, or even twenty years into the future.

Therefore: "Deliverability may be stable today, but future supply depends on investment confidence."

Three Risk Horizons

LNG Japan categorizes deliverability risks into three dimensions.

First, Immediate Disruptions.

These are short-term risks, including conflicts, disruptions to maritime routes, and logistical constraints.

Second, Policy-Driven Reallocation.

This occurs when the domestic priorities of producing countries change, resulting in adjustments to LNG allocations and export timing.

Third, Investment Environment Factors.

These are long-term risks.

Changes in fiscal regimes and regulatory frameworks influence investment decisions today and ultimately determine future supply. Therefore, LNG risks do not arise only when vessels are unable to pass through a particular strait. Such risks can begin to develop years earlier, when an LNG project decides not to proceed with a Final Investment Decision (FID) because of investment uncertainty.

Japan: Deliverability Is Not Assumed, but "Engineered"

This, in my view, is one of the most important lessons from LNG Japan's presentation.

Japan has limited domestic energy resources and is highly dependent on LNG. This means that Japan is permanently exposed to deliverability risks. However, Japan does not rely solely on supply contracts.

It has built an entire system. Three pillars were highlighted in the presentation.

1. Infrastructure

Japan has developed one of the world's largest LNG receiving capacities, along with extensive storage capabilities.

2. Flexibility

Japan has developed cargo-swapping capabilities and commercial flexibility.

3. Portfolio

Its supply does not depend on a single country, project, or route. Suppliers, projects, and shipping routes are diversified.

LNG Japan summarized this approach in a statement that I find particularly powerful: "Deliverability is not a given—it is engineered."

Deliverability is not something that exists automatically. It must be designed, developed, and managed.

Important Lessons for Indonesia

I believe this is where LNG Japan's presentation becomes particularly relevant to Indonesia.

Indonesia occupies a unique position. We are both an LNG producer and consumer. We have major LNG plants, newly discovered gas fields, receiving terminals, FSRUs, and gas-fired power plants. At the same time, we face the extraordinary geographical complexity of being an archipelagic country.

Therefore, Indonesia's LNG security cannot be measured solely by asking:

1. How many TCF of gas reserves do we have?

2. Or how many MTPA of LNG can we produce?

The question must be expanded to: Can that LNG reach the users who need it, when they need it, with acceptable specifications and prices?

That is deliverability.

Indonesia may have abundant gas resources in Papua, Maluku, Kalimantan, or Sumatra.

However, without appropriate liquefaction facilities, LNG carriers, receiving terminals, storage, regasification facilities, or pipelines, that gas is not yet fully deliverable to demand centers in practical terms.

From "Security of Supply" to "Security of Delivery"

In my view, Indonesia needs to begin expanding the concept of security of supply to include security of delivery. The two are different.

Security of supply asks: "Do we have gas?"

Security of delivery, on the other hand, asks: "Can that gas actually reach consumers when they need it?"

And to answer the second question, we need more than reserves.

We need infrastructure, shipping, storage, flexible contracts, portfolio management, consistent policies, and a healthy investment climate.

LNG Japan: Securing the Entire Value Chain

LNG Japan explained its approach through three components.

First, Secure & Diversified Supply.

Developing and investing in upstream and LNG projects across various regions, including Indonesia, Australia, the Middle East, and the United States, while combining these investments with long-term offtake contracts and strategic partnerships.

Second, Infrastructure & Logistics.

Investment does not stop at gas molecules. It extends to gas infrastructure and liquefaction, domestic distribution systems, and shipping and logistics capabilities.

Third, Partnership & Flexibility.

Working with buyers and utilities through long-term partnerships, volume flexibility, risk management, and cargo optimization. Therefore, the modern LNG business is no longer simply about: buy LNG – ship LNG – sell LNG.

Instead, it is about: secure – diversify – transport – store – swap – optimize – deliver.

That is the portfolio business.

Indonesia Should Not Merely Sell LNG

There is one strategic lesson that I believe deserves serious reflection.

If Indonesia thinks only as a seller of molecules, we primarily capture value from gas production and LNG sales. However, if Indonesia develops its capabilities as an LNG portfolio player, the opportunities for value creation become much greater.

We could manage LNG supplies from multiple projects, secure access to shipping, terminals, and storage, conduct cargo swaps, optimize destinations, manage cargo timing, and even connect domestic demand with international portfolios. In this way, LNG would no longer be merely a commodity.

LNG would become an integrated energy logistics business. And for an archipelagic country like Indonesia, such capabilities are even more important.

Deliverability Is a New Form of Energy Security

The conclusion of LNG Japan's presentation was unequivocal. The LNG market is being redefined.

The question is no longer simply whether LNG is available, but whether LNG can be delivered across time horizons, to where it is needed.

Geopolitical risks and chokepoints increase the risk of disruptions. Maritime and transit constraints increase lead times and costs. Market fragmentation widens regional price differentials and reduces arbitrage opportunities. And Asia, as the largest center of LNG demand, is the region most exposed to these developments.

Therefore, the solution is not simply to find more LNG. We must strengthen collaboration across the value chain, invest in flexibility, infrastructure, and new supply options, and align policies and investments to reduce uncertainty.

Supply Is Not Enough

For me, the central lesson from Koichiro Shoki's presentation can be summarized in four words:

1. Supply is not enough.

2. We may have reserves.

3. We may have production.

4. We may even have contracts.

But none of these is sufficient if LNG cannot reach the right place, at the right time, under the right commercial conditions. That is why, in modern LNG governance, perhaps we need to change the question. No longer:

"How much LNG do we have?"

But rather:

"How much LNG can we actually deliver?"

Because ultimately, molecules in the ground do not constitute energy security.Even molecules under contract do not necessarily guarantee energy security.

Energy security is only truly achieved when those molecules reach consumers and can be used when they are needed. That is deliverability.

And as Japan's experience teaches us: "Deliverability is not assumed. It must be engineered."

For Indonesia, now is the time to develop LNG governance based not only on security of supply, but also on security of delivery.

Because in the future, competitive advantage in Asia's LNG market may no longer be determined by who possesses the most LNG, but by who is best able to deliver it reliably, flexibly, competitively, and on time.

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Bogor, after Duha prayer

Monday, August 10, 2026