Japan has warned that global competition for liquefied natural gas is set to intensify over the next three years due to an underinvestment in supply.

Long-term LNG contracts that start before 2026 are sold out, according to a survey of Japanese companies conducted by the trade ministry and released Monday. These types of contracts are essential for buyers, as they offer stable pricing and reliable supply for many years.

Countries around the world are scrambling to secure shipments of the power plant and heating fuel from major exporters like Qatar and the United States, but there is little new supply coming online before 2026. Meanwhile, Europe is racing to replace Russian pipeline gas with LNG, further exacerbating the global shortage of fuel.

This means importers will be forced to depend more on the volatile and expensive spot market, which is currently trading nearly three times higher than long-term contracts. Roughly 30% of all LNG deliveries were via the spot market last year, according to the International Group of Liquefied Natural Gas Importers.

Japanese ministry officials and energy company executives met on the same day to discuss LNG procurement plans. Japan is poised to be the world’s biggest LNG importer this year, and the fuel is the nation’s top choice for power generation.

A lack of investment in LNG export projects means that supply will be very tight for years, the trade ministry document said. If Russian pipeline gas to Europe is cut completely, the world could see a shortage of 7.6 million tons of LNG in January 2025, equivalent to one month’s worth of imports to Japan, according to the document.

Japan has been taking steps to ramp up energy security by enabling the government to purchase LNG from the spot market in the event companies cannot.