A top utility executive is forecasting a significant increase in demand for liquefied natural gas, or LNG, in the lucrative Japanese energy market.

Yasushi Santo, general manager, international business, at Osaka Gas Co., said in an interview that environmental considerations, including clean air regulations, will increase the share of LNG in Japan's future energy balance.Established in 1905, Osaka Gas is Japan's second largest utility, and has annual group sales of $3.7 billion.

One reason for the growth in LNG demand in Japan is "because the electric companies are having problems increasing their capacity, due to the problems of nuclear power stations which are not well accepted," Mr. Santo said.

As a result, he said, many utility companies are now switching to burning LNG for power generation.

The switch to more LNG is also due to the fact that utilities are ''experiencing increasing demand from industrial and commercial sectors for gas. So utilities are looking to increased LNG capacity," he said.

Official Japanese energy policy is still putting most emphasis on nuclear power, and many Japanese officials see LNG as a transition fuel.

But Mr. Santo thinks policy might in the future come around to giving an increased role to LNG, because of market and environmental considerations.

LNG accounts for about 10 percent of total energy requirements, with 45 percent of the supply going to residences and the remaining 55 percent to industrial use.

Mr. Santo is confident that with industrial demand growing at around 10 percent to 15 percent a year, gas companies aggressively expanding their share of the energy market and mandatory environmental regulations pending, the market share for LNG will increase.

Because LNG is cleaner burning than oil, gas companies are trying to boost demand through gas sales for use in air conditioning and power cogeneration.

However, with the long lead time between the development and operation of LNG production facilities, Mr. Santo said his company is trying to increase its sources of supply in the Asia region.

He said Osaka Gas is negotiating with LNG suppliers and is close to picking new suppliers from a list made up of Australian, Malaysian and Indonesian companies.