On April 17, 2022, Gessler kindly drew my attention to a CNBC article of March 31, 2022.
That article reported:
“Japanese Prime Minister
Fumio Kishida’s announcement on [March 31, 2022] that he would not abandon a massive Russian [Sakhalin-2 liquefied natural
gas (LNG)] project was decided weeks ago when he told top
officials in private he wouldn’t risk Japan’s energy security, three sources
said. [Pete comment: Japanese, other western and Russian entities have been discussing the Sakhalin-II aka Sakhalin-2 LNG concept as early as 1991/92.]
Even as [Japan] targets
Russian banks and oligarchs with sanctions, Japan has less leeway than some of
its allies to cut ties to Russian gas, on which it has become more reliant
since shutting down nuclear reactors after the 2011 Fukushima disaster.
For more than a decade,
energy-poor Japan has tapped Russian gas to cut its Middle East oil reliance
and to make up for lost nuclear capacity.”
Though Russia's share of
Japanese energy imports is only about 8-10% (still much greater than India's),
the Sakhalin LNG projects are crucial for Japan's decarbonization agenda.
Pete Comment
Such a large project will continue long after Russia's invasion of Ukraine has been fought to standstill. If, as seems possible, Russia may end the invasion after seizing additional eastern and southern Ukrainian territory, it will be of little help to Ukraine if Japan permanently refuses to do business with Russia.
5 comments:
Japan is in a similar bind to Germany on this issue: there are few short-term alternatives due to past policy decisions.
Building new nuclear reactors to replace gas power will take ten years. Even then Japan would need some gas for industrial processes. In the long term things like export of "green Hydrogen" from Australia offers potential as a replacement, but that will also take at least ten years.
Hi Anonymous
I agree. Russia's oil/gas pipeline networks have been established for so long (ie. with long amortised costs) that they constitute a very price efficient energy source for Germany and increasingly Japan.
Two more arguments to continue to maintain economic ties with Russia in the LONG term are:
1. Russia's invasion/war against Ukraine may stabilise in a few months/years. If that is so there will be diminishing value for Ukraine and the West in having international sanctions against Russia last forever.
and
2. Sanctions can have unintended/counterproductive consequences in the long run. A histrical example being the oil embargo in WWII against Japan. This drove Japan into a radically unfortunate military course. That was Japan deciding to invade south against the Allies that ruled Southeast Asian oil fields. By this action Japan secured its oil needs by military means for a time.
If Putin can claim that Western alliance economic sanctions against Russia will be LONG term this may force Russia into a neo-Axis power alliance with China in economic and (more dangerously) strategic terms. See https://en.wikipedia.org/wiki/Axis_powers .
Regards Pete
Hi Pete
If Japan withdraws the Sakhalin-II Project, China, the potential enemy of Japan will definitely steal the Project.
Putin does not understand economy at all and might lose his political support from people. Recently, Russia increased the official discount rate to 20% to defend Ruble, which is a huge mistake in financial policy, and the market interest rate of Russia will increase more than 20% as the later rate is always higher than former, meaning the Russian companies must get profit more than 20% such as 30%. It is impossible. Many Russian companies will soon bankrupt, and many Russians will lose job.
Regards
Readovka has accidentally disclosed damage data of Russian Ministry of Defense : i) 13,400 death and 7,000 missing since the invasion, and ii) 116 death and 100+missing in Moscow sink
Thanks Anonymous [at Apr 23, 2022, 5:27:00 PM]
The Readovka reference to which you refer is on Twitter at https://twitter.com/nexta_tv/status/1517345729093775360 which reads:
"Pro-Kremlin resource Readovka reported about the death of 13,414 #Russian soldiers while around 7,000 are being missed [ie. are missing, probably dead or deserted].
These numbers were announced at a closed briefing of #Russia's Ministry of Defence. The post by Readovka has already been deleted."
COMMENT
Neo-Stalinist Putin is very displeased, decreeing "Off to the Gulag with Readovka's editors".
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