Japan’s need for Russian oil and gas: A shift in energy flows to the Far East

• Main Author: Motomura, Masumi
• Format: Article in Journal/Newspaper
• Language: unknown
• Subjects: Arctic; Fukushima; Sakhalin
• Online Access: http://www.sciencedirect.com/science/article/pii/S0301421514004777

This article examines the choices of Japan’s governmental institutions vis-à-vis Russian supplies of oil and gas. First, there is a perceived need to diversify the sources of crude oil in order to avoid too much reliance on the Middle East. Following the inauguration of the Sakhalin oil projects and completion of the ESPO pipeline, Russian crude oil is nearing a 10% share in the Japanese market. It is suggested that Russian crude oil supplies have been chosen due to their proximity, safety and flexibility, and their positive effect on Japan’s bargaining power in relation to crude suppliers in the Middle East. Second, Japan’s shift from nuclear to LNG in power generation after the Fukushima accident in March 2011 increased LNG imports by 25% in just two years. While Qatar expanded its market share the most, Russia also gained, even though it only had one operational LNG project in Sakhalin-2. Russian companies are now working on several LNG projects in Northeast Asia and the Arctic region. However, the resumption of nuclear power in Japan might have a negative impact on new Russian LNG projects. Energy; East Asia; ESPO; LNG; Fukushima;