Govt must prepare for possible suspension of Russian LNG imports

Editorial

11:57 JST, July 20, 2022

If the supply of liquified natural gas from Russia is disrupted, it will affect not only electricity but also city gas, which is essential for our daily lives.

The government should specify ways to use gas efficiently, and do its utmost to secure stable supplies.

The Economy, Trade and Industry Ministry plans to establish a gas-saving system that will encourage households and businesses to reduce their use of city gas. The ministry said it will draw up measures to deal with the situation before winter, when gas demand increases.

Japan depends on imports for almost all of its LNG, from which city gas is produced. About 10% of the imports come from Russia. About 60% is used for generating electricity and nearly 40% for city gas.

Although the supply-demand balance of city gas is not tight at the moment, it is understandable that a gas-saving system is being put in place to prepare for possible shortages. The government has already called for electricity conservation efforts, but there is currently no such framework for gas.

Under the ministry’s proposal, depending on the gas company service area, customers will be asked to voluntarily conserve gas when there is a strong possibility of supply shortages relative to demand.

According to the proposal, the ministry is considering asking households to reduce the use of gas burners, water heaters and heating appliances, among other items. But unlike with electricity, most people are not familiar with specific ways to cut gas usage.

The government and gas companies need to inform the public about gas-saving methods and their effects in an easy-to-understand manner.

The proposal states that if voluntary efforts do not improve the supply-demand balance, the government could issue orders to companies to curb gas usage.

About 30% of city gas is sold for household use and more than 60% for industrial and commercial use. City gas is thought to be used mainly by dining establishments and large factories.

It is hoped that the government will consider what measures are effective to save gas without causing a major impact on economic activities, while also listening to companies.

Last month, a presidential decree was issued in Russia, ordering the transfer of the Russian Far East’s Sakhalin-2 oil and natural gas project — in which Japanese trading houses have also invested — to a new company to be established by the Russian government.

There are concerns that this will be a de facto seizure by the Russian government and Japanese companies will be unilaterally excluded from the project. Most of the Russian-produced LNG imported by Japan reportedly comes from Sakhalin-2.

Russia’s attempt to infringe on the legitimate interests of other countries is unacceptable. In addition to strongly protesting Moscow’s moves, the Japanese government must take a firm stance in negotiations with Russia to maintain its interests in the project.

It is impossible to predict what Russia will do in the future. The Japanese government should make every possible effort to increase procurement from other producing countries, through such measures as asking the United States and Australia to increase production.

(From The Yomiuri Shimbun, July 20, 2022)