JAPAN’s energy “interests must not be undermined”, Tokyo said today after Moscow issued a decree transferring operations of a key oil and gas project to a new Russian company. 

Japanese trading houses Mitsui and Mitsubishi Corp own 12.5 and 10% stakes, respectively, in the Sakhalin-2 project, but the future of their investments appears uncertain after the Russian decree. 

It calls for the establishment of a new Russian operator and requires existing foreign shareholders to apply for the right to participate in the new firm, with Moscow deciding on their inclusion.

Japanese government spokesman Seiji Kihara said today that Tokyo is “closely examining the impact on liquefied natural gas (LNG) imports”.

“Speaking generally, we believe our resource interests must not be undermined,” he added, declining to give further comment.

Energy resource-poor Japan relies heavily on LNG imports and had previously ruled out withdrawal from the Sakhalin-2 project despite joining Western-led energy sanctions on Russia over the invasion of Ukraine.

Spokesmen for Mitsubishi and Mitsui would say only that the firms were examining the details of the decree in coordination with the government.

The other major stakeholder in the project is oil giant Shell, which has already committed to selling its 27.5% stake. 

Japan is heavily dependent on imported fossil fuels, in part because many of its nuclear reactors have been offline since the Fukushima meltdown in 2011. 

Russia supplies nearly 9% of Japan’s LNG demands, with Australian exports accounting for about 40% of the Japanese market. 

Japan is currently sweltering through a record heatwave, and the government has warned several times in recent days of a power crunch in the Tokyo region. 

Today, it began a three-month period in which it is asking residents to conserve power, with fears of shortages during the summer heat. – AFP, July 1, 2022.