TOKYO -- China is on track to overtake Japan as the world's largest buyer of liquefied natural gas, yet another sign of Beijing's economic ascendance and the relative decline of Tokyo's standing.

Chinese LNG imports are projected at 75.5 million tons this year, according to analytics firm Rystad Energy, edging out Japan's 75.1 million tons.

Japan has been the world leader in LNG purchases for the past half century. But the national market has matured and topped out. Over the past few years, Japanese utilities and gas companies have shortened LNG contracts at smaller volumes.

Meanwhile, deals in China are expanding along with its economy, with some purchasers agreeing to LNG contracts lasting over a decade with substantial import volumes.

Depending on how air conditioning and heating demand fluctuates with the weather, China may not top Japan for about a year or so. But sooner or later, China will surpass Japan.

Reduced dependence on energy imports may be seen as a positive development, but that comes with a cost. Ceding the top spot also translates to an erosion in bargaining power in a vital energy market.

For example, a 25-year LNG contract Qatar signed with seven Japanese power and gas companies is set to expire at the end of the year. The deal accounts for nearly 10% of the country's annual LNG imports by volume. Negotiations to renew the contract, however, have run into complications due to uncertainty over Japanese demand.

In 1992, just after the Gulf War, Chubu Electric Power became the first Japanese utility to agree to such a long-term deal with Qatar. Japanese trading houses Mitsui & Co. and Marubeni purchased minor stakes in LNG development joint ventures.

These relationships set Qatar on the path to becoming a major LNG supplier. But Qatar is now interested in a more lucrative client.

"Qatar is not really offering Japan good contractual terms," said an executive at a Japanese power and gas company, speaking about the ongoing negotiations.

To make matters worse, Qatar Petroleum announced in March that it will not renew the Qatargas 1 LNG joint venture that includes Mitsui and fellow Japanese trading house Marubeni, as well as American and French oil majors Exxon Mobil and Total. Qatar Petroleum will become the sole owner in January.

Japanese trading houses were expected to provide LNG sales routes to Japanese utilities, but now "Qatar is growing confident that it will be able to develop and distribute LNG by itself," said a Japanese government source.

For decades, Tokyo has encouraged domestic corporations to acquire resource interests overseas to ensure energy security. The goal is to raise the share of self-developed petroleum and natural gas to 40% or more by 2030.

But the unwinding of investments, like the one in Qatar, could derail Japan's plans.

It is crucial to establish a leading presence in the development and production of a natural resource while demand is hot in its own home market.

Now that the decarbonization trend has taken a worldwide scope, LNG has become less of a sure bet. Japan is leading the way in developing ammonia as a next-generation fuel, since the compound does not release carbon dioxide when burned.

Ammonia has the potential to become fuel for power generation the world over between 2040 and 2050.

Trading house Mitsubishi Corp. is exploring a clean ammonia project in Indonesia that would export the fuel to Japan. The study is partly subsidized by the Japan Oil, Gas and Metals National Corp., a state-backed institution.

"There is no global production company yet" for ammonia, said Hiroki Haba, Mitsubishi's chief operating officer for next-gen fuels and petroleum. "It's crucial for Japan to grab the lead in development and output while it still can."

Japan began importing and establishing a supply chain for LNG in 1969. Natural gas came to displace oil in electricity generation and became the source for the gas supplied to households. The shift also promoted the growth of industries such as heavy machinery and shipbuilding.

At this new turning point for energy, ammonia has the potential to be a game-changer, and could contribute to Japan's energy security. Making good use of the lessons and know-how gained from 50-plus years of working with LNG will be crucial.