Page 10 - FSUOGM Week 11 2022

FSUOGM POLICY FSUOGM

Japan stands by investments in

Russian oil and gas, for now

RUSSIA THE Japanese government is sticking to its guns Industry (METI), with Sakhalin -2 producing
over a decision to keep importing Russian oil and both oil and gas, the bulk of which is shipped to
Japanese firms have gas, despite much of the rest of the world impos- Japan as LNG.
been less reluctant ing sanctions and working to isolate Moscow A Japanese government-led group owns 30%
to depart Russian following its invasion of Ukraine. of Sakhalin-1, while Japanese firms Mitsubishi
than their Western Citing the extensive number of investments and Mitsui & Co. own a combined 22.5% of the
counterparts. made in projects in Russia’s Far East in the past Sakhalin-2 facility.
50 years, Tokyo is determined to avoid over-re- While Mitsubishi and Mitsui are now thought
liance on Middle Eastern countries for fuel sup- to be considering their stance, two Japanese
plies at a time when oil prices are on the rise. investors in Sakhalin-1, Itochu and Marubeni,
Analysts in Japan have also pointed to the Octo- have yet to comment on the situation.
ber 1973 to March 1974 oil crisis, which led to Mitsui alone has recently indicated that its
government-ordered cuts on industry’s use of oil current investments and loan guarantees linked
and subsequent electricity supply. to the Sakhalin project amount to roughly $4bn.
Somewhat in contradiction to his desire to Last year, almost 10% of all gas and 4% of oil
keep the oil from Russia flowing, however, Jap- imports to Japan came from Russia, and much of
anese Prime Minister Fumio Kishida has also this from the Sakhalin projects.
authorised banking sanctions on Moscow. At Supporting the prime minister, the chairman
the same time, he offered financial aid in excess of the Japan Chamber of Commerce and Indus-
of $100mn to Kyiv, describing the invasion of try, Akio Mimura, said: “I certainly don’t think
Ukraine as something that “we absolutely can- that Japanese companies immediately need to
not accept”. fall into line” (with Western countries). Japanese
Referring to his government’s decision to Minister of Economy, Trade and Industry Koichi
keep investments in Russian government energy Hagiuda added that Sakhalin-1 must be consid-
infrastructure open, though, Kishida went on to ered “an important project for our country’s sta-
say that reliable energy supply was seen as “a part ble supply of energy”.
of the national interest that we have to protect to The Japan Bank for International Co-opera-
the maximum extent possible”. tion’s (JBIC), governor, Tadashi Maeda, mean-
Kishida went on to say that Tokyo would care- while offered a cautionary albeit vague “we can’t
fully watch how other countries respond in the just go ahead with business as usual”. The JBIC
days ahead as the situation in Ukraine develops, is a major lender connected to energy projects
prior to committing to any further moves. in Russia.
Japanese investment in Russia is most promi- According to local media in Japan, however,
nent in the 950-km long island of Sakhalin to the a growing number of industry officials is now
north of the Japanese archipelago. The island was starting to question the government’s stance.
first colonised by the Japanese in the early 17th Unnamed executives in the financial and auto-
century and is still claimed as Japanese territory motive sectors in particular have argued that
by some. It is now home to the Sakhalin-1 and the hit to Japan’s global business reputation
Sakhalin-2 oil and gas projects. should be considered more important than
Sakhalin-1 currently produces around the government’s investments in a country
220,000 barrels per day (bpd) of oil, accord- being condemned worldwide for invading its
ing to Japan’s Ministry of Economy, Trade, and neighbour.™

P10 www. NEWSBASE .com Week 11 16•March•2022