Page 5 - AsianOil Week 38 2022

AsianOil COMMENTARY AsianOil

made a back-end arrangement to evade the price even if the paperwork says otherwise.
cap.” “For example, a crude buyer could create
Likewise, “excessively high service costs a large account with the Russian central bank.
may be an indication that a service provider has Funds would be deducted from the account to
made a back-end arrangement to evade the price procure licences to cover every barrel it pur-
cap” and that “attempts to use opaque payment chases,” he said. “The purchase invoices, how-
mechanisms may indicate the customer or coun- ever, would indicate, falsely, that the buyer had
terparty is avoiding creating documentation paid a price close to the ceiling price established
around payment,” the treasury stated. by the US treasury. The ceiling price strategy,
“Despite such vigilance, there is no way for then, would not affect Russia’s oil revenues.”
the treasury to learn of buyers who pay the Furthermore, Verleger stresses that the price
Russian central bank sums that entitle them to cap could drive global oil prices higher, poten-
acquire Russian oil,” Verleger said. “Put bluntly, tially to as much as $150 per barrel.
such transactions are invisible to the treasury. “This boost would occur only if the G7 action
The easiest way for Russia to circumvent the ‘froze’ trade in global oil due to the uncertainty
price cap would be to announce that buyers regarding the US government’s actions,” he said.
interested in Russian oil must purchase a licence “If it did happen, it could raise Russia’s oil income
to do so from the country’s central bank.” by 50% while worsening the global recession.”
The price of that licence would be the differ- China and India – key markets for Russian
ence between global oil prices and the treasury’s oil – have both resisted Western calls to commit
ceiling price. to the price cap proposal. But in some sense,
“Oil purchases by licensees would be invoiced according to reports, they have already helped
at the ceiling price or even a discount from the reduce Russia’s revenues from oil exports. Rus-
ceiling price,” he said. “Buyers would obtain such sia is now offering China and India significant
discounts, just as they do today.” discounts on oil supplies, to dissuade them
Verleger warns that such an approach would from agreeing to the Western proposal, various
boost Russia’s receipts rather than shrink them, reports in the Asian media have claimed. ™

EAST ASIA

Toho Gas next Japanese buyer to sign

new contract with Sakhalin-2

PIPELINES & TOHO Gas has become the latest Japanese signed supply agreements with the new Sakha-
TRANSPORT gas buyer to renew its contract for LNG from lin-2 operator, including Jera, Kyushu Electric
the Sakhalin-2 project in Russia, local media Power, Hiroshima Gas and Tokyo Gas. Like-
A state-backed entity reported on September 20. wise, the contractual terms including volumes
assumed control of the According to the Kyodo media newspaper, are reported to be the same.
Sahalin-2 project in Toho Gas will continue to procure 500,000 Japan’s government exerted pressure on Mit-
mid-August. tonnes per year (tpy) of LNG until 2033, having sui and Mitsubishi to maintain their positions
agreed the new contract with Sakhalin-2’s new at Sakhalin-2, because of concerns about the
state-established operator. The contractual terms potential loss of gas supply from the project. Like
remain the same. many other countries, Japan is in the grip of an
A state-backed entity assumed control of the energy crisis, and it is the biggest buyer of gas
Sakhalin LNG project in mid-August, replacing from the Russian terminal, given its close prox-
the international consortium Sakhalin Energy imity. The government had voiced concerns that
Investment as operator. The Russian government if Japanese companies left, gas from the facility
had earlier accused the foreign partners at the would be sent to Japan’s geopolitical rival China
project – Shell and Japan’s Mitsui and Mitsubishi instead.
– of violating their shareholder obligations. In the wake of the 2011 Fukushima nuclear
Russia’s Gazprom automatically retained disaster, Japan began turning off its nuclear
the same majority shareholding in Sakhalin-2’s power plants, (NPPs) and replacing much of
new operator as it did in its previous one. Mit- that baseload energy supply with gas-fired gen-
sui and Mitsubishi have agreed to take stakes in eration. But the global gas crisis has exposed the
the new entity, but Shell is yet to announce its country’s overreliance to imported LNG. The
decision. The Anglo-Dutch major has vowed government said in August it would restart some
to withdraw from Russia in light of its invasion idle nuclear reactors, and potentially increase
of Ukraine. the lifespans of ones still in operation and build
Other Japanese energy companies have also new-generation units. ™

Week 38 26•September•2022 www. NEWSBASE .com P5