TOKYO: The natural gas and oil development projects off the Russian Far East island of Sakhalin, in which Japan’s government and private sector hold stakes, are important energy sources for Japan, an annual government report said Tuesday.

In the energy white paper, adopted at the day’s cabinet meeting, the Japanese government noted that Russia’s invasion of Ukraine, which started in late February, has accelerated the surge in resources prices.

While U.S. and British partners have announced their withdrawals from the Sakhalin-1 and Sakhalin-2 projects in the wake of the Russian aggression against Ukraine, Japanese Prime Minister Fumio Kishida has said Japan will continue its participation in the projects.

The Sakhalin projects are “essential energy sources” for electricity and gas supplies in Japan, which now heavily relies on the Middle East for energy, the white paper said.

If Japan pulls out of the projects, that would end up “benefiting Russia and harming Japan’s energy security,” the report said, reiterating the government’s stance of maintaining its interests in the projects.

The report pointed out that resources prices had begun rising sharply even before the Russian invasion of Ukraine, reflecting an increase in energy demand due to the global economic recovery from the COVID-19 pandemic as well as insufficient fossil fuel-related investment.

The ongoing price uptrend “may not be temporary,” it warned.

However, thanks in part to the government’s subsidies to oil wholesalers, the pace of fuel price rises is relatively slow in Japan compared with overseas, it said.

JIJI Press