Asian gas buyers puzzle over Putin's demand for payment in roubles
24/03/2022 07:08
By Yuka Obayashi and Heekyong Yang
TOKYO, March 24 (Reuters) - Asian importers of Russian gas
were scrambling on Thursday after Russian President Vladimir
Putin said "unfriendly" countries must pay for Russian gas in
roubles, in the latest jolt to global energy markets after
Moscow's invasion of Ukraine.
Japan, South Korea and Taiwan were on the list of countries
deemed unfriendly. They all import liquefied natural gas (LNG)
from the Sakhalin-2 and Yamal LNG projects in eastern Russia.
Putin said on Wednesday that Russia, which calls its actions
in Ukraine a "special military operation", would continue to
supply gas in volumes and prices fixed in contracts but would
require payment in Russian roubles. urn:newsml:reuters.com:*:nL5N2VQ3RS
Japan, the biggest importer of Russian LNG in Asia, had no
idea how Russia would enforce that requirement.
"Currently, we're looking into the situation with relevant
ministries as we don't quite understand what (Russia's)
intention is and how they would do this," Finance Minister
Shunichi Suzuki said in parliament.
Japan imported 6.84 million tonnes of LNG from Russia in
2021, according to Refinitiv trade flow data, making up nearly
9% of its LNG imports.
JERA, Japan's biggest LNG buyer, has not received any
notification from Sakhalin Energy, the joint venture that
operates Sakhalin-2, to change the currency of payment from the
U.S. dollar, a company spokesperson said. The spokesperson added
that the country's biggest power generator will keep gathering
information.
A thermal power and fuel joint venture between Tokyo
Electric Power Company Holdings 9501.T and Chubu Electric
Power 9502.T , JERA buys about 2 million tonnes a year (tpy) of
LNG from the Sakhalin-2 project under long-term contracts,
according to Japan Oil, Gas and Metals National Corporation's
(JOGMEC) data.
Tokyo Gas 9531.T and Osaka Gas 9532.T , the country's two
biggest local gas suppliers, also were checking details on the
rouble requirement, company spokespersons said on Thursday.
Tokyo Gas, one of Japan's largest LNG buyers, declined to
comment on any details of its long-term contract for 1.1 million
tpy with Sakhalin Energy, including what currency it can use for
payment.
Sakhalin Energy is 50% owned by Russia's Gazprom GAZP.MM ,
with Shell SHEL.L holding a 27.5% stake while the rest is held
by Japan's trading companies Mitsui & Co 8031.T and Mitsubishi
Corp 8058.T . Shell said on Feb. 28 that it would quit the
project and the Japanese government has said Shell's exit did
not impact Japan's energy imports. urn:newsml:reuters.com:*:nL4N2V34Z8 urn:newsml:reuters.com:*:nT9N2U1008
Mitsui and Mitsubishi are checking details of the Russia's
announcement, their spokesmen said.
OTHER BUYERS
South Korea, Asia's third-largest importer of Russian LNG,
expected to be able to continue imports, with the country's
Financial Services Commission saying it would do whatever was
necessary to facilitate trade.
Korea Gas Corp (KOGAS) 036460.KS said it imports about 2
million tpy of Russian LNG, making up about 6% of the company's
imports. However, KOGAS does not transact directly with Russia
as its purchase contract is with Sakhalin Energy and payments
for the gas go into a Japanese bank in Singapore, it added.
"Since we are making payments to that Japanese bank, we are
not currently seeing issues now, but we are closely monitoring
the development," a KOGAS official said.
Taiwan's economy ministry said state-owned CPC Corp has one
gas shipment arriving from Russia at the end of this month.
It said they had received "no news that the payment system
will be adjusted".
The call for payments in roubles was seen as Putin's way of
trying to shore up the rouble, which has collapsed after the
imposition of sanctions on Russia.
Putin said the government and central bank had one week to
come up with a solution on moving operations into the Russian
currency and that Gazprom would be ordered to make the
corresponding changes to contracts.
However the move is unlikely to work for Moscow, said Eswar
Prasad, a trade policy professor at Cornell University.
"Foreign importers would no doubt be happy to pay for their
purchases of Russia's exports in a currency that is collapsing
in value, although getting access to roubles in a manner that
does not fall afoul of sanctions could be tricky," Prasad said.
Getting paid in roubles would do little to secure the hard
currencies Russia needs to prop up its currency's value in
global markets or pay for imports from other countries, he
added.
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Global gas prices https://tmsnrt.rs/3qxJ2fr
Asia's Russian LNG imports https://tmsnrt.rs/3ICkpV0
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(Reporting by reporting by Yuka Obayashi, Kantaro Komiya and
Ritsuko Shimizu in Tokyo, Heekyong Yang and Joori Roh in Seoul,
Jeanny Kao in Taipei and Arathy Somasekhar in Houston; Writing
by Sonali Paul; Editing by Florence Tan and Gerry Doyle)
((Sonali.Paul@thomsonreuters.com; +61 407 119 523;))