Editor’s Note
This article examines the complex position Japan faces as the US intensifies pressure on Russia’s energy sector. While aligned with G7 allies on sanctions, Japan’s significant reliance on Russian LNG highlights the practical challenges of swiftly decoupling from a key energy supplier.
The Trump administration in the United States is increasing pressure on Russia, which continues its aggression in Ukraine. In an effort to cut energy revenues that fund the war, it has added two major Russian oil companies to its economic sanctions list and is calling on its allies to follow suit.
While the Group of Seven (G7) nations are strengthening sanctions against Russia, Japan has been sourcing nearly 10% of its liquefied natural gas (LNG) from Russia. However, US Treasury Secretary Bescent has conveyed to Japan that the US “expects” a halt to imports of Russian energy, indicating that Japan may not be granted an exception.
Japan must prepare, both publicly and privately, to ensure there is no disruption to its LNG procurement.
The Russian LNG imported by Japan comes from the Sakhalin-2 oil and natural gas development project in the Russian Far East, in which Mitsui & Co. and Mitsubishi Corp. participate. The US has exempted transactions related to Sakhalin-2 from its financial sanctions against Russia, but this special measure is set to expire in the early hours of December 19.
LNG demand is expanding globally, and finding alternative sources that can provide stable, long-term, low-cost supply is not easy. Nevertheless, a concerted public-private effort is essential.
In the medium to long term, the United States emerges as a strong candidate for an alternative source. It is also crucial to advance negotiations to secure favorable terms for procuring US LNG.
Procurement contracts from Sakhalin-2 are set to be renewed in phases starting in and after 2029. There is a strong view that if Japan does not renew them, it would benefit China, which is actively expanding its LNG procurement. However, dependence on Russia for LNG is problematic from an energy security perspective.
While the outlook for peace in Ukraine remains uncertain, we urge thorough public-private consideration of how to respond according to the situation, including regarding contract renewals.
Regarding Russian LNG, the European Union (EU) has agreed to halt imports by the end of 2026. As a member of the G7, it is natural that Japan should also advance efforts to increase pressure on Russia.
However, for resource-poor Japan, LNG is indispensable for daily life and industry. To mitigate the impact, it is necessary to maximize the use of all available means, such as promoting the restart of nuclear power plants.