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Japanese lawmakers to lobby Abe for Russian gas pipeline
11:38, 28 May 2014, 512

AKIPRESS.COM - Japanese lawmakers are reviving efforts for a 600 billion yen ($5.9 billion) natural gas pipeline from Russia, which last week signed a supply deal with China, to cut energy costs after the Fukushima nuclear disaster, Bloomberg said.

A group of 33 lawmakers is backing the 1,350-kilometer (839 miles) pipeline between Russia’s Sakhalin Island and Japan’s Ibaraki prefecture, northeast of Tokyo, Naokazu Takemoto, the secretary general of the group, said in an interview on May 23. He plans to propose the project to Prime Minister Shinzo Abe as early as June so it’s on the agenda when Russian President Vladimir Putin visits in autumn, he said.

The shutdown of Japan’s nuclear reactors after the 2011 Fukushima disaster has spurred renewed interest in the Russia-Japan pipeline link, which has been discussed for more than a decade, Takemoto said. The effort also highlights Russia’s expanding role as a energy supplier to Asia after the country signed a $400 billion deal last week to sell China 38 billion cubic meters of gas annually for 30 years.

Japan spent a record 7 trillion yen last year on liquefied natural gas imports, more than double the cost three years ago, according to the Ministry of Finance. The country could lower its energy bill by getting gas directly by pipeline rather than more-expensive LNG, which is shipped by tankers, Takemoto said.

“Building an LNG plant requires a lot of money and makes the per unit cost of gas very expensive,” said Takemoto, who serves in the House of Representatives as a member of the ruling Liberal Democratic Party. “Japan would be better off” buying gas via pipeline, he said.

The Russia-China accord for gas supplies by pipeline from eastern Siberia was probably reached at a price of $10.50 to $11 per million British thermal units, Bank of America Corp. said in a report yesterday. That compares with a current spot price of $13.30 for liquefied natural gas cargoes delivered to Northeast Asia. Spot LNG prices are at a 19-month low after falling from a record of $19.70 in February, according to data compiled by Bloomberg from New York-based Energy Intelligence Group.

While Japan could buy Russian gas at a cheaper price similar to the China deal if the pipeline is built, Russia would also benefit from the project, said Osamu Fujisawa, a Tokyo-based independent energy economist.

“Russia wants to extend its market,” Fujisawa said in a phone interview today. “It made a deal with China, and Japan is the next target. Then, Russia doesn’t have to rely on Europe,” which is trying to reduce dependence on the country’s gas supplies amid the crisis in Ukraine, he said.


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