While Japan’s downward economy may have been addressed with the revival brought on by “Abenomics,” another concern for the resource-strapped nation is where to get its oil and energy fuel. Japan has been trying to establish better relations with Russia as an alternative energy source but with growing pressure from the West to sanction the former Soviet for its annexation of Crimea, it seemed that option may be shelved for now.
But the presence of Igor Sechin, president of the state-owned Rosneft and a close friend of Russian President Vladimir Putin at the 6th Japan-Russia Investment Forum had many thinking otherwise. While it was a surprise to most of the industry leaders to see him there, the general view is that Sechin represents Russia’s commitment to strengthen relations with Japan. In fact, in another gathering of the leaders from the energy industry in Moscow for the 20th anniversary of the Sakhalin-2 LNG plant, representatives from both Japan and Russia met on the sidelines and agreed to work closely on the plant’s expansion project.
However, other factors affected the discussions and what seemed to be a cemented agreement then did not push through. The Ukraine crisis has increased the prices up by $10, according to economist Takayuki Nogami. Japanese traders eventually decided against investing because of profitability issues. The Russian oil producer is seriously considering changing payment terms from the US dollar to the Euro, in the event further sanctions affect their business. Despite the breakdown of the deal, utility firms in Japan, which rely heavily on imports from Russia, remain unruffled. Kyushu Electric Power President Michiaki Uriu said, “We have to pay close attention to future developments.” He added, “But we have the spot market and other alternatives.”
[via Nikkei Asian Review]
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