Japanese energy firms prepare for possible supply cut from Russia
"Japanese energy firms brace for possible supply cut from Russia" 27 March 2022
Japanese gas and energy firms are closely monitoring the developments of Russia's aggression in Ukraine, with some eyeing non-Russia players as alternative suppliers on concerns Moscow may reduce or suspend its natural gas supply in retaliation for Western sanctions on the country.
To prepare for potential supply disruptions from Russia and other emergencies, Hiroshima Gas Co. is considering purchasing liquefied natural gas from Malaysia and other producers, while Osaka Gas Co. plans to bring forward gas procurement from the United States or Australia.
In resource-poor Japan, Russia accounted for 3.6 percent of its crude oil imports and 8.8 percent of LNG imports in 2021, according to Japan External Trade Organisation data.
Most of Japan's LNG imports from Moscow come from the Sakhalin 2 large-scale oil and gas project, a joint venture involving Japanese trading houses in the Russian Far East with an annual output capacity of about 10 million tons of LNG.
Hiroshima Gas, based in Hiroshima Prefecture, western Japan, procures about 200,000 tons, or about half of its annual LNG purchases in a contract running through March 2028 from the Sakhalin 2 project.
Takehiro Honjo, head of the Japan Gas Association, said the organization will create a structure that will allow companies to share their supplies in case of a LNG supply crunch.
"It will be a problem that Japan faces as a country, and it cannot be solved unless (each company) comes and works together," he said at a press conference earlier this month.
Tokyo Gas Co. is also paying attention to the crisis unfolding in Ukraine because the company purchases about 10 percent of its LNG from Russia.
The utility, which caters to the Tokyo metropolitan area, imports about 1.1 million tons a year from Sakhalin.
Fukuoka-based Saibu Gas Co. and Nagoya-based Toho Gas Co. purchase some of their LNG supply from Russia, while Tohoku Electric Power Co. and Kyushu Electric Power Co. obtain both coal and LNG from the country.
Mitsui & Co. and Mitsubishi Corp. hold a 12.5 percent and 10 percent stake, respectively, in the business, in which Russian energy giant Gazprom PJSC has about a 50 percent stake.
While Mitsui and Mitsubishi said they will continue talks about the project with the government and other stakeholders, Economy, Trade and Industry Minister Koichi Hagiuda has said both public and private sectors must cooperate and "take every possible measure to prepare for an unpredictable event" in regards to the project.