Page 4 - AsiaElec Week 35 2022

AsiaElec POLICY AsiaElec

Asian energy giants snub US

sanction efforts

ASIA THE governments of Japan and South Korea, was centred on the need for a reliable supply of
two of America’s most important regional allies affordable LNG as winter approaches.
in East Asia, have together thumbed their noses Yet with LNG prices in Asia hitting record
at US-led sanctions on Russia. highs in August as spot prices reached between
In doing so, statements from both capitals $42 and $43, Japan and South Korea starting
indicate they have either agreed energy con- their annual stockpile efforts ahead of winter
tracts worth billions or confirmed large-scale was seen as only exacerbating the wider problem.
tech exports to Moscow, despite the February The past few years had seen Japan become
24 invasion of Ukraine, and US-led widespread increasingly reliant on Middle Eastern nations
international condemnation. for their LNG supply, something seen as poten-
Announcing the deals reached with Moscow tially hazardous by Tokyo should conflict, polit-
was seen as the latest highly publicised body- ical or otherwise, arise in the region.
blow to efforts by the White House to cut off The subsequent irony of conflict in Ukraine
Russia’s energy links with the rest of the world. involving their northern neighbour thus prov-
Most prominent was the on-again, off-again ing the impetus behind diversification of LNG
predicament facing Japanese energy giants in sources for Japan was not lost on analysts in
relation to securing long-term LNG supplies Tokyo.
from the Sakhalin 2 natural gas fields in Russia’s On the western side of the Sea of Japan,
Far East. meanwhile, authorities in Seoul announced on
Initial calls from the US for Japan to abandon August 25 that Korea Hydro & Nuclear Power
any deals involving exports from Sakhalin were Co (KHNP) had reached a $2.25bn deal to sup-
largely ignored in Tokyo, albeit with the Japa- ply components and engineering know-how
nese government keeping one eye on any reac- towards a planned Russian nuclear power plant
tion from Washington. This was not an attitude (NPP) in Egypt.
adopted across wider Japanese society, and on Governments in both Seoul under new
occasion the thought of losing billions already President Yoon Suk-yeol, and in Tokyo under
invested in Sakhalin was openly scoffed at by Prime Minister Fumio Kishida, have made clear
Japanese media pundits. their intent in recent weeks to boost reliance on
Threats of being cut off altogether from access nuclear power and related domestic industries.
to Sakhalin LNG exports by Russian President South Korea’s Senior Secretary for Economic
Vladimir Putin, however, saw the government Affairs, Choi Sang-mok, said the KNHP deal
in Japan eventually opt to maintain their current with Moscow was the largest such export deal in
stakes in the project. over a decade despite “unforeseen difficulties”;
Household names Mitsui & Co. and Mitsubi- an indication that US pressure not to agree the
shi Corp. are Japan’s main players in the Sakhalin deal had been an issue.
2 project with a combined 20.5% ownership. Hinting at energy problems in Asia caused by
Differences of opinion with the Moscow-in- US policy on Russia is one thing in Korea. Facing
stalled management at the site in recent months the US head on is another altogether.
initially led to something of a standoff, but have As a result, President Yoon, soon after sign-
now been settled, with Moscow being informed ing off on the deal, reportedly ordered a team
of Tokyo’s decision to hold on to the stake in to be formed to explain to the US the reason-
Sakhalin earlier in the week. ing behind his government’s decision to supply
Sources in Japan indicate that the decision to nuclear tech to Moscow.™
work with Russia, rather than appease the US by
joining sanctions and abandoning Sakhalin 2,

P4 www. NEWSBASE .com Week 35 31•August•2022