Japan will have to keep importing Russian liquefied natural gas due to soaring energy prices and limited prospects for restarting nuclear power plants, according to the head of one of Asia’s largest shipping conglomerates.
Mitsui OSK Lines Chairman and CEO Takeshi Hashimoto says the country lacks viable alternatives to Russian LNG, which it buys relatively cheaply under long-term deals, to secure its supply basic.
“We can’t use many nuclear power plants, so the balance between supply and demand in the power industry is quite tight,” he told the Financial Times. “Nowadays, the LNG and coal spot market is quite expensive. This is one of the reasons why Japan is so reluctant to stop LNG imports from Russia.
Moscow decided on Thursday to take control of the Sakhalin-2 gas project, 22.5% owned by Japanese companies, calling into question the continuity of supply even as the Japanese electricity system is under pressure from a heat wave torrid.
Hashimoto said MOL plans to continue serving Japanese gas buyers such as Tokyo Gas and Jera with imports from Russia. “Since Japanese buyers need Sakhalin-2 LNG, we will certainly do our best to continue our normal services, regardless of Russian national policy,” he said.
MOL’s fleet consists of around 700 vessels covering dry bulk carriers, tankers, car carriers and container ships. It plays a vital role in Russia’s LNG export ambitions by transporting the fuel from northern Siberia to consumers on special icebreaker vessels.
Hashimoto was “pretty confident” that Russia would complete the first of three phases of the $23 billion Arctic LNG 2 project by next year, but said “almost everything has stopped” on plans for expansion. Each phase is designed to produce 6.6 million tonnes of LNG, with the first stage alone yielding a potential 20% increase in Russian LNG exports.
MOL ordered three icebreaker carriers for Arctic LNG 2 in 2020, which Hashimoto said were nearing completion. It then ordered four LNG carriers and a condensate carrier for the project.
The Japanese government this week asked residents and businesses in the Tokyo area to conserve energy to avoid blackouts.
Japan will hold elections for the upper house of parliament this month, with the power crisis fueled by Russia’s war on Ukraine likely to reignite a fierce debate over whether the country needs to restart its idle nuclear power plants.
Before the Fukushima nuclear disaster in 2011, Japan generated around 30% of its electricity from nuclear, but that figure has fallen well below 10% in recent years. Japan is now more dependent on fossil fuels for its energy needs. Russian LNG accounts for about a tenth of its gas imports.
Hashimoto said the country would import LNG, coal and oil longer than many other countries because fierce public opposition made it “very difficult for Japan to open many nuclear power generators”.