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Japanese energy firms seek supply backups over Russian supply concerns

Japanese energy firms seek supply backups over Russian supply concerns

Japanese energy and gas companies are reportedly keeping a careful eye on Russia's attack on Ukraine, with some looking out for non-Russian companies as alternative suppliers, fearful that Moscow would cut down or entirely cancel natural gas supplies in retribution for Western sanctions.

Hiroshima Gas Co, the Japan-based gas firm, is mulling over a decision to buy liquefied natural gas from Malaysia as well as other suppliers to prepare for future supply shortages from Russia and perhaps potential emergencies, while another utility, Osaka Gas Co plans to bring forwards gas procurement from Australia or the United States.

Russia's President, Vladimir Putin, has also stunned Japanese energy corporations by announcing that Russia will demand payment in rubles, rather than the frequently used euro or dollar, for gas supplies to unfriendly nations such as the US and Japan, which have imposed sanctions on Moscow.

Hiroshima Gas stated that the company is keeping a close eye on emerging developments, such as the impact of Russian economic sanctions.

The firm will keep working with other firms to gather data in order to ensure a constant supply.

According to Tom O'Sullivan, founder, Mathyos Global Advisory, an energy and security advisory company based out of Tokyo, the Russian President’s announcement is possibly a violation of the contract between the buyers and vendors, and if realized, would strike the European market heavily.

As per data from the Japan External Trade Organization, Russia accounted for 3.6% of the nation’s crude oil imports and approximately 8.8% of liquified natural gas (LNG) imports in 2021.

A majority of Japan’s Russian LNG imports come from the Sakhalin 2 major oil and gas project, a JV that involves leading Japanese trade houses in the Far East of Russia with a yearly output capacity of roughly 10 million tons of LNG.

Tokyo Gas Co, Saibu Gas Co in Fukuoka, Toho Gas Co in Nagoya, Kyushu Electric Power Co, Tohoku Electric Power Co get their LNG and coal from Russia.

O'Sullivan further stated that Japanese energy companies must keep a contingency plan in place in case they are unable to secure natural gas Russia.

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Omkar Patwardhan

Omkar Patwardhan started his professional career in the hospitality industry. Having nurtured a deep-sated passion for words however, he found his way into content writing and now pens down articles for numerous websites, including News Origins, spanning the sectors of business, finance, and technology.