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Posted: 2023-03-31 07:28:50

Security, or lack thereof, can be a powerful motivator.

In the case of the latter, the term fight or flight pretty much sums up the human impulse to act when forced into a tight corner and left vulnerable.

Perhaps it is for those reasons that one of Japan's corporate titans this week took the extraordinary step of delivering an incendiary speech to a high-powered group in federal parliament.

In remarks that reportedly left observers stunned, Inpex boss Takayuki Ueda warned that Australia risked undermining world peace by "quietly quitting" the liquefied natural gas business.

He was backed by Japanese ambassador Yamagami Shingo, who said Tokyo might be a city that never slept, but its lights would go out if Australia stopped supplying Japan with energy.

So, are the warnings real and how much stock should we put in them?

A Japanese man wearing a dark pin-striped suit standing at a lectern.
Yamagami Shingo says the energy trade is a crucial bridge between Australia and Japan.(Perth USAsia Centre: Kelly Pilgrim-Byrne)

How secure are Japan's resources?

In the words of acclaimed American energy writer Daniel Yergin, Japan has long viewed the issue of resource security differently from most developed countries because it is "virtually devoid of natural resources".

Up until the 1970s, the miracle of Japan's post-war economic recovery had been largely fuelled by oil imports from the Middle East.

"But the oil shocks of the 1970s, which threatened to undermine Japan's post-war economic miracle, were deeply traumatic," Yergin wrote in his 2011 book The Quest.

Despite its lack of natural resources, Japan's economy is the third biggest in the world, with a gross domestic product of more than $US5.5 trillion ($8.2tn).

The country is a manufacturing powerhouse and is home to many of the world's leading automotive and high-tech brands.

It is also home to 125 million people who enjoy some of the highest living standards and longest life expectancies in the world.

For all this economic success, Japan is almost totally dependent on foreign countries for the natural resources it needs to underpin such prosperity.

Nowhere is this more evident than with energy.

Japan has few fossil fuel resources of its own and its geography and location make it unsuited to the easy adoption of renewable energy.

"Unlike the United States, Japan … could not even dream of energy independence," Yergin noted.

People cross a busy intersection at night in Tokyo.
Japan's vibrant, neon-lit cities get much of their power needs from Australia.(AP: Kiichiro Sato)

What does Australia supply Japan?

If Japan's economic growth after the horrors of the Second World War was something of a miracle, then Australia's role in the transformation was almost as compelling.

In 1957, prime minister Robert Menzies struck a historic commerce agreement with his Japanese counterpart, Nobusuke Kishi, that would pave the way for closer trade ties between the two countries.

That the deal was struck at a time of trade protectionism and tariff walls was one thing.

That it was struck in the shadow of a global conflict in which Australia and Japan had been bitter adversaries was something else entirely.

Yet it would lay the foundations of a trade relationship that helped enrich both countries.

Not long after deal, shipments of Australian iron ore were sent north to feed the Japanese mills turning out the steel required for the country's mass rebuilding and urbanisation.

In doing so, Australia would open up an industry that has grown to become its most valuable source of export income.

A couple of decades later, in the 1980s, Japan would be the cornerstone of another mammoth Australian industry — this time for super-chilled gas (or LNG) shipped on giant tankers.

Throughout it all, Australia has been a consistent supplier of coking and thermal coal to Japan.

According to Mr Yamagami, Japan relied on Australia to provide 70 per cent of its coal imports, 60 per cent of its iron ore and 40 per cent of its gas.

Men in high-vis and safety helmets walk through an industrial site.
Japan has been the cornerstone for some of Australia's biggest industries, including iron ore.(Supplied: Rio Tinto)

What are the Japanese concerns?

Given the lack of its own natural resources and its heavy dependence on Australia as an exporter, Japan is perhaps more attuned to potential supply risks than any other advanced nation.

It's what drove the development of Australia's iron ore industry and it's what created the LNG industry, which was born when Japan agreed to buy the output from the North West Shelf project off Western Australia's north via long-term take-or-pay deals.

More recently, Japan has sought extra security over its access to energy resources in Australia by investing more directly in LNG projects across the country.

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