TOKYO: Tokyo Gas Co Ltd said on Wednesday it was not an option for the Japanese city gas distributor to voluntarily stop buying liquefied natural gas (LNG) from the Sakhalin-2 project in Russia as it needs a stable fuel supply, according to its CFO.
“It’s difficult to quickly find alternatives for Russian LNG as it accounts for about 10% of our fuel imports,” Tokyo Gas Chief Financial Officer Hirofumi Sato told a news conference.
“The choice not to buy LNG from Sakhalin-2 voluntarily is basically an untenable one, based on the premise of a stable supply,” he said.
The Ukraine crisis, triggered by what Moscow has called a “special military operation”, spotlighted Japan’s role in Russian energy projects as Western oil majors have decided to pull out of the country.
Sato said there had been no disruption in importing LNG from the project, but one of Japan’s biggest LNG importers may see some impact from rising insurance fees for shipping.
Asked if Tokyo Gas will divert LNG cargoes to Europe in response to the Japanese government’s request, Sato said there was not much excess supply to spare.
The Japanese government said in February it would divert some LNG cargoes to Europe on requests from the United States and the European Union.
On Wednesday, Russia’s Gazprom halted gas supplies to Poland and Bulgaria over their failure to pay in roubles, raising concerns over tight supply in Europe.
Despite needs to secure a stable gas supply, Tokyo Gas’s investment focus remains decarbonisation, rather than upstream LNG projects.
“We had bought stakes in some Australian LNG projects in the past as that linked with securing LNG offtake, but things have changed,” he said, adding that securing offtake and investing in upstream project were two different things.