Japan says sanctions on Russia will affect LNG project

- Advertisement -

TOKYO- US sanctions will have an impact on the Arctic LNG 2 project in Russia in which Japanese shareholders hold a combined 10 percent stake, Japan’s industry minister Yasutoshi Nishimura said on Tuesday.

The project was important to ensure a stable supply of liquefied natural gas (LNG) for resource-poor Japan and the Japanese government will respond appropriately not to impair its energy supply, he said.

“We believe that a certain degree of impact on the business is inevitable,” Nishimura told a news conference.

- Advertisement -

“We will work with the Group of Seven (G7) countries to make a comprehensive judgment and respond appropriately so as not to impair the stable energy supply to our nation,” he said.

Last Thursday, the United States imposed sweeping new measures against Moscow over the war in Ukraine, targeting a major entity involved in the development, operation and ownership of a massive project in Siberia known as Arctic LNG 2.

The project is operated by Russia’s Novatek while Japanese trading company Mitsui & Co and state-owned Japan Organization for Metals and Energy Security (JOGMEC) hold a combined 10 percent stake.

The project expected to ship the chilled natural gas to global markets.

Mitsui said on Friday it would examine the impact of the sanctions on the project and “take appropriate measures in cooperation with stakeholders including the Japanese government”.

Mitsui’s exposure to the Arctic LNG 2, including investments, loans and guarantees, was 249 billion yen ($1.7 billion) as of the end of September, after deducting a provision of 19.9 billion yen which has recorded for the guarantees, according to the company.

While Europe has slashed its imports of piped Russian natural gas, it has bought some 13 million metric tons of liquefied natural gas (LNG) so far in 2023, little changed from a year ago, LSEG data showed on Tuesday.

Belgium, Spain and France have been the top buyers, the data showed, as Russia’s sales to Europe were little changed from 13.3 million tons a year earlier.

LNG is not subject to European sanctions imposed on Russian over the conflict in Ukraine and Europe has no short-term plan to include it.

However, Russia’s plans to expand its global LNG exports could be hampered by US -imposed sanctions against its Arctic LNG 2 plant, which is scheduled to start production later this year.

The LSEG data showed that Belgium had imported 3.79 million tons of LNG from Novatek -controlled Yamal LNG, Russia’s biggest LNG plant, as of Oct. 31.

Terminals in Spain received 3.64 million tons from Russia, while France imported 3.18 million tons.

Yamal LNG has exported 14.56 million tons of LNG this year, down 11.2 percent from a year earlier, including 11.54 million tons sent to Europe and 2.44 million to Asia.

Russia’s mid-sized Vysotsk plant, also controlled by Novatek, has shipped around 600,000 tons of LNG, while Gazprom’s Portovaya plant has exported around 860,000 tons.

Russia’s January-October LNG exports to Asia fell to 10.4 million tons from 12.5 million a year earlier, with the Gazprom-controlled Sakhalin 2 plant shipping 7.9 million tons of it.

According to Reuters calculations, Russia exported 24 million tons of LNG between January and October, down 8 percent from 26 million a year earlier.

Russia’s LNG exports to Europe in 2022 soared by 20 percent to around 17 million tons. -Reuters

- Advertisement -spot_img

Author

- Advertisement -

Share post: