Japan's LNG Dilemma: Balancing Russian Imports Amid U.S. Pressure

Japanese utilities JERA and Tohoku Electric Power might secure alternative LNG supplies if Sakhalin-2 flows are disrupted due to U.S. pressure to cease Russian imports. They are exploring options like increased U.S. purchases. Japan's government struggles with balancing energy security, cost, and geopolitical pressures.

Japanese energy giants, JERA and Tohoku Electric Power Co, have asserted their capacity to source alternative supplies should the flow from Russia's Sakhalin-2 LNG project be interrupted. The statement comes amidst heightened pressure from the United States urging Japan to halt Russian energy imports.

The plea by the U.S. aims at further isolating the Kremlin to halt the conflict in Ukraine. Japan, however, heavily relies on Sakhalin-2, with long-term contracts accounting for approximately 9% of its total LNG imports. JERA's annual contracts from Sakhalin-2 are particularly substantial, roughly around two million tons, set to lapse in 2026 and 2029. Despite geopolitical tension, Naohiro Maekawa, an executive at JERA, believes there are still possibilities to manage any shortfalls.

Meanwhile, Tohoku Electric, deriving about a tenth of its LNG from the project, is in the process of diversifying sources to cushion any abrupt supply halts. As discussions with U.S. LNG providers continue, Japan's Prime Minister Sanae Takaichi conveyed to President Donald Trump the challenges in completely banning Russian LNG, a move which could severely impact Japan's electricity costs during delicate economic times.

(With inputs from agencies.)