Japan asks Australia to increase LNG supplies after Russia's decisions on Sakhalin-2
The Minister of Economy, Trade and Industry of the country, Koichi Hagiuda, said that the latest decisions of the Russian Federation regarding the Sakhalin-2 gas project, which provides about 9% of Japan's needs, "will not lead to an immediate cessation of supplies".
Japan's Economy, Trade and Industry Minister Koichi Hagiuda has asked Australia to increase production and supply of liquefied natural gas (LNG) so that Tokyo can ensure its energy security. He made a corresponding statement on Wednesday on the sidelines of the Sydney Energy Forum.
Speaking at a meeting of energy ministers from the Quad (Quadrapartite Security Dialogue, which includes Australia, India, the United States and Japan), held as part of the forum, Hagiuda asked Australian Energy Minister Chris Bowen to "increase LNG production due to Tokyo's concerns about possible interruptions in the supply of gas from Russia. "This will be of great importance and will lead to the strengthening of our energy security," the Japanese minister said.
Hagiuda also noted in his speech that Russia's latest decisions regarding the Sakhalin-2 gas project, which provides about 9% of Japan's needs, "will not lead to an immediate cessation of supplies." "However, we need to take all possible measures to prepare for unforeseen circumstances," he said, stressing that at the moment securing gas supplies is Tokyo's top energy priority.
Australia supplies almost 40% of all LNG to Japan, according to the Australian Department of Energy.
The International Energy Forum is taking place in Sydney from 12 to 13 July. The event, organized by the Australian Government and the International Energy Agency, was attended by the energy ministers of Australia, India, Indonesia, Samoa, the United States and Japan, as well as representatives of the business community and leaders of large companies supporting and developing green technologies.
About the Sakhalin-2 project
On July 1, Russian President Vladimir Putin signed a decree according to which the operator of the Sakhalin-2 project, which is being implemented under the terms of a production sharing agreement (PSA), will be replaced by a limited liability company created by Russia, instead of Sakhalin Energy. The property of Sakhalin Energy will be transferred free of charge to the Russian Federation, which will transfer it to the new operator for the duration of the PSA, and all the rights and obligations of the predecessor will be transferred to it. The remaining shareholders of Sakhalin Energy must agree within a month to accept shares in the new organization in proportion to the shares in the former one. The controlling stake (50% plus one share) in Sakhalin Energy belongs to Gazprom, Shell has a 27.5% stake, Mitsui and Mitsubishi - 12.5% and 10%, respectively.
Most of the liquefied natural gas produced under the project is supplied to Japan. Deliveries from Russia cover 8.8% of the country's needs for LNG, most of which comes from Sakhalin-2. In connection with the events in Ukraine, Shell announced its withdrawal from the project. At the same time, Bloomberg reported that Chinese state-owned oil and gas companies are interested in buying Shell's stake in the project.