Japan tops up LNG reserves as possible Russian gas cutoff looms -source (updated)
11/04/2022 16:18
(Details difference between gas storage in Europe and Japan)
By Ritsuko Shimizu and Yuka Obayashi
TOKYO, April 11 (Reuters) - Japan's government has asked
power companies to top up their liquefied natural gas (LNG)
reserves and share energy resources, a person familiar with the
contingency plan said, as civilian deaths in Ukraine push Tokyo
to halt Russian fuel imports.
Utilities are scrambling for already stretched energy
sources as resource-poor Japan joins the West in punishing
Russia, a major oil and gas producer - a search made harder on
Friday when Prime Minister Fumio Kishida announced a ban on
Russian coal and other sanctions. urn:newsml:reuters.com:*:nL2N2W5321
Kishida, who faces national elections in July, is seeking to
balance energy security for the world's third-biggest economy
against growing pressure on the Group of Seven industrial powers
for harsher sanctions against Russia as allegations of
atrocities in Ukraine spread.
The International Criminal Court is investigating what
Ukraine and several G7 leaders have called war crimes by Russia
in Ukraine. Moscow rejects the allegations and denies targeting
civilians in what it calls a "special military operation" to
demilitarise and "denazify" its neighbour. urn:newsml:reuters.com:*:nL2N2VR1EN
Japan's industry ministry has directed power companies to
ensure they have three weeks of reserves and has urged gas and
electricity companies to sell each other spare gas rather than
offer it overseas, the source told Reuters.
Ministry officials are also discussing LNG measures with
industry representatives, said the source, who asked not to be
identified because they are not allowed to talk to the media.
The Ministry of Economy, Trade and Industry officials said
no one was available who could comment. The Prime Minister's
Office declined to comment, referring questions to relevant
ministries.
The measures would be modest, matching steps utilities took
during a power crunch last year, and Russian LNG accounts for
just 3% of Japan’s overall electricity production.
But Japan has little room for error. Generating capacity has
been stretched by the closure of nuclear power plants in the
wake of the 2011 Fukushima disaster. An earthquake last month
that temporarily knocked out some power plants prompted warnings
of blackouts. urn:newsml:reuters.com:*:nL2N2VP024
SUPPLY UNCERTAINTY
Japan aims to reduce its dependence on Russian energy but
will continue to import from Sakhalin oil and gas projects in
Russia's Far East, in which the Japanese government and
companies hold stakes, Kishida said recently. urn:newsml:reuters.com:*:nL2N2VY0DB
Whether Japan can keep the Sakhalin gas flowing, however,
has become less certain after Russia threatened to cut off gas
to "unfriendly" European countries unless they pay in roubles.
Unlike some European countries that can store months of
natural gas supplies in underground salt caverns or depleted gas
fields, Japan keeps LNG superchilled in storage above ground
near import terminals. Those terminals can only store around
three weeks of the fuel.
As uncertainty grows over Russian energy imports, Japanese
utilities have started looking for ways to replace Russian gas,
which makes up 9% of the LNG consumed in Japan. It is used to
generate electricity and is also piped to homes and businesses.
"In the event that getting that (Sakhalin LNG) becomes
impossible, we will look for other sources or get some from
other companies," Kensuke Matsufuji, the president of Hiroshima
Gas Co 9535.T , said last week.
The company, which supplies Kishida's hometown and gets half
its LNG from Russia, is in talks to buy gas elsewhere, including
from Malaysia, a company spokesperson told Reuters.
Tokyo Gas Co 9531.T , which gets one-tenth of its LNG from
Russia, is also trying to buy more gas directly from producers
in order to avoid spot markets, where it is around five times as
expensive.
The company has approached LNG producers in the United
States but has yet to win any commitment for increased
shipments, president Takashi Uchida told the Nikkei newspaper.
A Tokyo Gas spokesperson said the company could increase its
supplies from the United States under existing contracts but
declined to say whether it had asked to do so.
(Reporting by Ritsuko Shimizu, Yuka Obayashi and Yoshifumi
Takemoto; Writing by Tim Kelly; Editing by William Mallard)
((tim.kelly@thomsonreuters.com; +813-6441-1311;))