Original title: 21 Depth｜The risk of “lack of gas” intensifies, Japanese companies are difficult to abandon the Russian Far East oil and gas project
21st Century Business Herald reporter Hu Huiyin reported in Guangzhou
According to CCTV news reports, a number of Japanese companies are considering signing contracts with the new operator of Russia’s “Sakhalin 2” oil and gas project. If the deal goes through, it will help ease Japan’s concerns about a sharp rise in natural gas prices.
The “Sakhalin 2” project is located on the continental shelf of Sakhalin Island in the Russian Far East. The oil reserves involved are about 100 million tons and the natural gas reserves are more than 400 billion cubic meters. About 9% of Japan’s LNG imports come from this project.
Russian President Vladimir Putin signed a decree on June 30 to establish a new company to operate “Sakhalin 2”. The original foreign shareholders of the project must apply to retain shares in the new company within one month, which will be decided by the Russian government. whether to approve.
It is reported that Russia prohibits personnel from “unfriendly” countries and regions from trading shares in Russian strategic projects, energy and mining companies and some banks before the end of this year. Japan is also listed as an “unfriendly country” by Russia, so it has expressed concern about the Sakhalin project and has repeatedly emphasized that it will not give up its rights and interests in the project.
In addition to maintaining its interest in the “Sakhalin 2” project, Japan also resumed imports of Russian oil in July. It is worth noting that in June, Japan’s oil purchases from Russia fell to zero at one point.
Wang Yongzhong, director of the International Commodities Research Office of the Institute of World Economics and Political Science of the Chinese Academy of Social Sciences, told the 21st Century Business Herald reporter that under the high temperature in summer, Japan’s electricity demand is tight, energy demand is rising, and Japan’s sanctions against Russia have greatly reduced energy imports. Exacerbated the domestic energy shortage.
Sanctions on Russia are turned around after a month. What kind of energy anxiety does Japan have? Will the aid of the US and Australia, combined with plans to restart nuclear power, solve Japan’s energy shortages?
Japan considers signing a contract with a new operator of the Russian project
In order to maintain their interests in “Sakhalin 2”, the two Japanese companies involved in the project have shown a positive gesture to the new operator company on the Russian side.
Recently, a number of Japanese companies are considering signing contracts with a new operator of Russia’s “Sakhalin 2” oil and gas project. According to the decree previously signed by Russian President Vladimir Putin, the new operator of the “Sakhalin 2” oil and gas project was established on August 5. The original foreign shareholders of the project must apply to retain shares in the new company within one month. The Russian government decides whether to approve it. Russia said the measure was made due to Western sanctions. In July this year, the Russian side said that Japan’s “extremely unfriendly” stance towards Russia would not help the energy dialogue between the two sides, and warned that Japan might be “out” in an important energy project.
Encountered by Russia’s “counter-sanctions”, Japan has repeatedly stated that “the policy of maintaining rights and interests remains unchanged.” Japan’s Minister of Economy and Industry Koichi Hagiita also emphasized that “Sakhalin 2” is an important right and will be dealt with in the form of “integration of the government and the people” to protect the rights and interests of Japanese companies and ensure a stable supply of liquefied natural gas (LNG). Japan’s Mitsui & Co. and Mitsubishi Corporation previously held 12.5% and 10% respectively in this project, and the remaining foreign shareholder, Shell, has announced that it will withdraw.
The main reason why Japan attaches so much importance to the “Sakhalin 2” project is that the Russian natural gas imported by Japan basically comes from this project.
“The ‘Sakhalin 2’ project produces about 10 million tons of natural gas per year, of which more than 60% is exported to Japan, which is the main channel for Japan to import Russian natural gas.” Du Bingqin, an energy and chemical analyst at Everbright Futures, told the 21st Century Business Herald The reporter said that if Japanese companies cannot retain their shares in these projects, Japan’s natural gas supply will face a larger gap.
Wang Tong, an energy and chemical analyst at Chaos Tiancheng Research Institute, also told the 21st Century Business Herald reporter that Japan’s annual LNG imports from the Sakhalin project account for about 8.8% of its total LNG imports. At the same time, the Sakhalin Island in Russia, where “Sakhalin 2” is located, is relatively close to Japan, which is of great significance for Japan to ensure energy security and stability. He believes that if Japan loses its stake in “Sakhalin 2”, in addition to huge losses, the stability and security of its energy structure will be shaken, which will be unacceptable for Japan, a country that is highly dependent on energy imports. of.
Although Japanese companies are very active in approaching and communicating with the new operator of the “Sakhalin 2” oil and gas project, the decision-making power is still firmly in the hands of the Russian government.
In this regard, Sun Cheng, a professor at the School of Politics and Public Administration of China University of Political Science and Law and director of the East Asian International Studies Center, said in an interview with a reporter from the 21st Century Business Herald that Russia’s countermeasures in the energy field will have a negative impact on Japan in the “Sakhalin”. The operation of No. 2″ has a greater impact. “As of now, it seems that Japan has no more choice but to comply with Russia’s conditions.”
Sanctions give way to energy demand
On May 9 this year, Japanese Prime Minister Fumio Kishida said that Japan would in principle prohibit the import of oil produced by Russia, saying that “the unity of the Group of Seven (G7) is more important.” In June, Japan’s oil imports from Russia shrunk to zero at one point.
However, real needs outweigh political slogans. In the end, Japan did not stand up and resumed importing oil from Russia in July, but the import volume fell by 65.4% compared with the same period last year; the scale of liquefied natural gas imported from Russia in July also decreased by 26.1% year-on-year; in the first half of the year, Japan imported from Russia The scale of imported oil fell by 21.7% year-on-year.
“The reduction of Russian oil imports to zero reflects Japan’s desire to further get rid of its dependence on Russian energy. However, the turnaround has taken place only after one month, indicating that Japan, which mainly relies on fossil fuels for power generation under the recent high temperature weather in the northern hemisphere, The power supply is tight.” Du Bingqin pointed out.
At the beginning of June, the Japanese government held a meeting to prepare for the shortage of power supply, pointing out that the current power supply is “extremely serious”, asking households and businesses to save power from July to September, and asking power companies to restart stopped thermal power plants, and purchase more fuel. It is reported that this is the first time in the past seven years that Japan has put forward a national-scale power saving requirement. According to Japanese media statistics, within the jurisdictions of Chubu Electric Power, Tokyo Electric Power, and Tohoku Electric Power, Japan’s power reserve rate in July is expected to be 3.1%, barely higher than the minimum 3% required for stable supply.
Japan mainly relies on fossil fuels to generate electricity, of which natural gas is the main source. According to the “Energy White Paper 2021” released by the Japan Agency for Natural Resources and Energy, among the energy composition of power generation in Japan in 2019, coal accounted for 31.8%, oil accounted for 6.8%, liquefied natural gas accounted for 37.1%, and nuclear energy accounted for 6.2% In addition, water power accounted for 7.8%, and new energy accounted for 10.3%.
Du Bingqin further analyzed that if extreme weather occurs again in Japan this winter, the risk of tight natural gas supply will further increase. “The hot weather this summer is far more than in previous years. At present, Japan’s power supply has been insufficient. The power supply reserve rate of most power utilities in Japan is only about 3%, while the normal level is about 7%-8%. If the problem cannot be solved, if the hot weather continues, Japan may face the risk of widespread power outages.”
It’s hard to “snatch up”
In the “Sakhalin 2” project is facing the risk of “out”, Japan is running from all sides to seek energy supply to make up for the potential energy gap.
In early July, Japanese Minister of Economy, Trade and Industry Koichi Hagiuda went to Sydney, Australia to attend the meeting of energy ministers of the United States, Australia, Japan and India. Before leaving, he said he would firmly demand the United States and Australia to increase LNG production to ensure stable supply to Japan. As early as May, when Hagiata visited the United States, he expressed that he would provide support for the increase of LNG production in the United States, such as granting loans to Japanese companies participating in the production of LNG in the United States.
However, the result of Japan’s “request for help” does not seem to be ideal. There are reports that Australian authorities may block some natural gas exports to make up for domestic shortages. Australia is Japan’s largest supplier of LNG, accounting for more than 36% of its total imports. If Australia restricts natural gas exports, it will undoubtedly have a major impact on Japan.
At the same time, the United States is also shifting the focus of its energy exports to Europe. According to data released by the International Energy Agency in late June, the EU imported more LNG from the United States than Russia for the first time in June. Wang Yongzhong told reporters that even if Japan seeks foreign aid, U.S. energy will give priority to Europe. In addition, Japan has to compete with Europe when purchasing through market channels, which will lead to a substantial increase in the price of LNG in Asia and increase the purchase cost.
On the one hand, it is difficult for Japan to obtain energy supplies from the United States and Australia. On the other hand, it is also facing extremely fierce competition in the open market. “The EU’s massive purchase of oil and natural gas around the world also makes it difficult for Japan to purchase oil and gas resources that are sufficient to deal with the current high temperature in markets other than Russia.” Du Bingqin said.
Asian spot LNG benchmark prices were just above $52 per million British thermal units last week, the highest level in the past five months and three times higher than a year earlier. On the other hand, TTF, the benchmark natural gas price in Europe, has soared even more sharply, recording $67 per million British thermal units last month.
But even so, Japan still has to hurry up and “hoard gas” in order to ensure the energy stock in winter. Wang Tong told reporters that it was estimated that Japan’s current LNG inventory is at a historically medium level, while in previous years, Japan generally entered the LNG accelerated replenishment period in August, and its final inventory depends on Japan’s replenishment before November. Happening.
To restart nuclear power
To stabilize energy supply and prices, Fumio Kishida announced in May that Japan would take firm steps to restart idled nuclear power plants. It is reported that in addition to the five nuclear power plants currently in operation, the Japanese government is also preparing to restart the other four, bringing a total of nine.
There is still considerable resistance in Japan to restart nuclear power, but the attitude of many Japanese people to “talk about nuclear discoloration” has eased. According to the latest poll, 53% of respondents in Japan support restarting nuclear power on the premise of safety, the highest percentage since the Fukushima nuclear accident in 2011.
Earlier, the interim report on the clean energy strategy released by Japan’s Ministry of Economy, Trade and Industry also clearly stated that nuclear power and clean energy should be used together as an important source of electricity for continuous use. In this regard, Sun admitted that the current number of nuclear power plants in Japan is still far from the peak period when there were 54 nuclear power plants, and although Japan has plans to build and renovate nuclear power plants, it still needs to be prepared technically.
Looking forward to the future, Du Bingqin told reporters that although the Japanese government has proposed a green transformation investment plan of 150 trillion yen, it has not made specific policies and details of financial support. It is expected that the vigorous promotion of renewable energy power generation in Japan will take time, and it will be difficult to effectively make up for the energy supply gap caused by the shortage of oil and natural gas in the short term.”
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