By Yuka Obayashi and Katya Golubkova
TOKYO (Reuters) -Japanese utilities JERA, Tohoku Electric Power and Kyushu Electric Power, all liquefied natural gas buyers from Russia’s Sakhalin-2, can secure alternative supplies if flows are interrupted, excutives said, as the U.S. pressures countries to halt energy imports from Russia.
The U.S. this month urged Japan, along with other Russian energy buyers, to stop imports, as it pushes the Kremlin towards ending the war in Ukraine. Japan’s long-term contracts with Sakhalin-2 cover about 9% of its LNG imports.
JERA gets about 2 million tons of LNG per year from the project under two contracts ending in 2026 and 2029. JERA is also a major LNG trader, handling a total of 30 million tons to 35 million tons of LNG annually both for domestic use and to re-sell elsewhere.
Taking into consideration JERA’s imports from Sakhalin and the company’s overall LNG handling volumes, including an option to tap the spot market, “there is a good chance that we will be able to do something” in case Sakhalin supplies need to be replaced, Naohiro Maekawa, an executive officer with JERA, told a briefing on Friday.
Tohoku Electric Power, which gets around a tenth of its LNG from Sakhalin, is working to diversify supplies to mitigate a risk of a sudden interruption, senior executive Takayoshi Enomoto said on Thursday.
Tohoku’s contract with the project expires in 2030. The company is considering an eventual halt in Russia purchases, another senior official said in February, and Tohoku may increase U.S. LNG purchases.
Kyushu Electric Power, which gets a half million tons of LNG per year from a Sakhalin-2 deal that is expiring in 2031, would consider bringing forward delivery from other LNG contracts, spot procurement and market procurement through electricity trading in case of disruption, said Yoshikazu Miyazono, the deputy general manager at the firm’s Tokyo branch, on Friday.
Japan’s Prime Minister Sanae Takaichi told U.S. President Donald Trump during their meeting in Tokyo this week that banning Russian LNG imports would be difficult, two Japanese government officials said.
To guard against unexpected supply shocks, Japan is also buying LNG for emergency needs under a scheme it may expand for greater energy security.
SUPPORT FOR ALASKA LNG STILL UNCERTAIN
U.S. Treasury Secretary Scott Bessent repeated on Thursday he believed Japan would eventually stop receiving Russian LNG supplies and join the Alaska LNG project Trump favours.
“I believe over time, they (Japan) will be weaning off of that (Sakhalin-2 LNG), and they will be part of a very large pipeline project that the U.S. is constructing in Alaska,” Bessent told the FOX Business TV programme, adding that South Korea and China might also back the U.S. project.
While committing to various U.S. LNG sources and upstream projects, Japanese buyers remain wary of hard deals with the maiden $44-billion Alaska LNG project, with JERA and Tokyo Gas announcing only preliminary offtakes.
JERA’s Maekawa said that his company continued to gather information on Alaska’s feasibility and stability of supply.
“It is quite unclear what the procurement cost will be … (but) it could bring a positive impact in terms of energy security and supply diversification,” said Tohoku’s Enomoto.
(Reporting by Yuka Obayashi and Katya Golubkova; Editing by Kate Mayberry)
