Resource-Poor Japan Skittish About Sanctions vs Russian Energy

While some Western countries have been backing away from energy resources from Russia as part of sanctions over its invasion of Ukraine, resource-poor Japan is taking a more cautious approach due to its heavy dependence on energy imports, Ayano Shimizu reported for Kyodo News.

Photo Insert: Experts said it is not that easy for Japan to give up its stakes in the Sakhalin 1 and Sakhalin 2 large-scale oil and gas projects in the Russian Far East.

The US announced earlier this month it will ban Russian oil and other energy imports in what is largely a symbolic move to punish Moscow over its aggression as Washington is not a major importer of Russian oil. Britain also said that it will phase out imports of Russian oil by the end of the year.

But experts said it is not easy for Japan and its companies to follow suit, including giving up their stakes in the Sakhalin 1 and Sakhalin 2 large-scale oil and gas projects in the Russian Far East due to their importance to Japan's energy security.

Japan's energy self-sufficiency rate was as low as 11.2 percent as of fiscal 2020 through March 2021, according to Japan's Agency for Natural Resources and Energy.

Russia accounted for 3.6 percent of Japanese crude oil imports, and 8.8 percent of its liquefied natural gas imports in 2021, data from the Japan External Trade Organization (JETRO) show.

The response of the Japanese government and companies to the Sakhalin 1 and Sakhalin 2 projects has been in focus since oil majors Shell PLC of Britain and American Exxon Mobil Corp. announced ends to their respective involvements in them following Moscow's invasion of Ukraine on Feb. 24.

Japan's Sakhalin Oil and Gas Development Co., invested in by the government as well as trading houses Itochu Corp. and Marubeni Corp. among others, owns a 30 percent stake in Sakhalin 1.

Trading houses Mitsui & Co. and Mitsubishi Corp. hold a 12.5 percent and 10 percent stake, respectively, in the Sakhalin 2 project, in which Russian energy giant Gazprom PJSC has about a 50 percent stake. The joint venture produces most of Japan's gas imports from Moscow.

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