July 14, 2024
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Japan will maintain Russia oil and gas projects: economy minister



Japan “does not intend to withdraw” from oil and liquefied natural gas development projects in Russia, trade minister Koichi Hagiuda told reporters on Friday, as it makes a choice between energy security and further tightening sanctions on Russia for the war in Ukraine.

Japanese trading and other companies have invested in the Sakhalin-1, Sakhalin-2 and Arctic LNG 2 (ARC 2) projects. Each has been deemed essential to Japan’s energy security.

“We have interest in them and have secured long-term claimants,” said Hagiuda, the Minister of Economy, Trade and Industry, in regard to Sakhalin-1 and Sakhalin-2. “In the current situation of sudden energy price increases, we can procure energy at prices cheaper than the market price. This is extremely important for energy security.”

He also said Japan “does not intend to withdraw” from the ARC 2 project in the Arctic. Economic sanctions over the Ukraine war prohibit new European investment in Russia’s energy sector. Japanese and French companies that have invested in ARC 2 are no longer able to make new investments. “We want to analyze the impact of sanctions and respond appropriately,” Hagiuda said.

On Thursday, Russian President Vladimir Putin signed a presidential decree requiring companies from “unfriendly countries” like the U.S., Japan and those in western Europe to pay in rubles when purchasing Russian natural gas. “We don’t think it will immediately affect Japan,” Hagiuda said, implying that the scope of the order is limited, “but we want to monitor it closely.”

Sakhalin-1 has received funding from METI, Itochu, Japan Petroleum Exploration Company, Marubeni and Inpex. Sakhalin-2 counts Mitsui and Mitsubishi among its investors. ARC 2 has received funds from Mitsui and Japan Oil, Gas and Metals National Corporation.

Culled from Nikkie Assia

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