Arab News Japan

TOKYO: Japan’s Minister of Economy, Trade and Industry Koichi Hagiuda expressed a cautious stance on the energy business in Russia, where Western companies such as Shell have announced their withdrawal, saying, “If Japan leaves and a third country acquires rights and interests, it will not be sanctioned.”

Minister Hagiuta, who is also in charge of the country’s energy policy on Monday said, “It’s easy to say that we should be brave here and withdraw, but for Japan, which lacks resources, we still have to protect the people’s livelihood and economy.”

In particular, regarding the oil and gas project Sakhalin 1, which the Ministry of Economy, Trade and Industry also participates in, he said, “It is an important facility for Japan, which relies on the Middle East for about 90% of its oil imports. We will respond appropriately in cooperation with the international community.”

On March 1, Shell said it will exit all oil and gas projects involving Russian state-owned energy giant Gazprom of Sakhalin-2 offshore liquefied natural gas plant, in response to Russia’s invasion of Ukraine.

Japanese Mitsui & Co. and Mitsubishi Corp., hold 12.5% and 10% shares respectively in Sakhalin-2, while Shell holds a 27.5% and Gazprom owns 50%. Mitsui and Mitsubishi control.

Sakhalin-2 can produce about 10 million tons of LNG per year, equivalent to more than 10% of Japan’s annual imports. About half is supplied to eight Japanese gas and power companies through long-term contracts, Nikkei reported.

LNG carriers can travel from Sakhalin to buyers in northeastern Asia within days, while shipments can take more than two weeks to arrive from Qatar and more than three weeks from the US.