Japan should take time to phase out Russian oil imports, says PM Kishida

Japanese Prime Minister Fumio Kishida delivers a speech at Guildhall in London, Britain, May 5, 2022. REUTERS/Peter Nichols

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TOKYO (Reuters) – Japanese Prime Minister Fumio Kishida said on Monday it would take time for Japan to phase out Russian oil imports after agreeing a ban with Group of Seven nations to counter Moscow’s invasion of Ukraine.

The G7 nations committed to the move “in a timely and orderly fashion” at an online meeting on Sunday to put more pressure on President Vladimir Putin, even though members such as resource-poor Japan rely heavily on Russian fuel. Read more

“For a country that relies heavily on energy imports, this is a very difficult decision. But G7 coordination is the most important at a time like now,” Kishida told reporters, repeating comments he made at the G7 meeting.

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“As for the timing of reducing or stopping (Russian) oil imports, we will consider it while measuring the actual situation,” he said. “We will take our time to take steps toward phasing out.” He did not go into details.

According to Refinitiv data, there have been no ships carrying Russian oil to Japan since mid-April. About 1.9 million barrels were exported from Russia to Japan in April, down 33% from the same month a year ago.

The country imported a total of 89 million barrels of oil in March.

Japan’s imports of crude oil since 2013

The Ukraine crisis highlighted Japan’s energy dependence on Russia even as Tokyo acted swiftly and in tandem with the G7 in imposing sanctions.

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The latest ban underscores a shift in Japan’s policy. Japan said it would be difficult to immediately cut off Russian oil imports, which account for about 33 million barrels of Japan’s total oil imports, or 4%, for 2021. Read more

It has already said it will ban imports of Russian coal in phases, leaving only LNG. Japan is in a particularly difficult situation since it shut down the bulk of its nuclear reactors in the wake of the 2011 Fukushima nuclear disaster.

Russia was the fifth largest supplier of crude oil and liquefied natural gas to Japan last year.

The Japanese government and companies own stakes in oil and liquefied natural gas projects in Russia, including two projects on Sakhalin Island that are partners of Exxon Mobil Corp. (XOM.N) and Shell PLC (coincidence) They announced that they were going out.

However, Japan’s largest oil refiner, Eneos Holdings Inc (5020.T), has already stopped buying Russian crude, saying it will get supplies from the Middle East. 2nd place Idemitsu Kosan Co Ltd (5019.T) It also said it had no plans to buy Russian crude. Read more

“The major Japanese refiners have already stopped signing any new contracts for the purchase of Russian oil, and there were no problems in securing alternatives,” Shinya Okuda, managing director of the Japan Petroleum Association, told Reuters.

“Refineries will continue their efforts to diversify sources of supply, but Japan’s dependence on Middle Eastern crude should increase in the short term as the region’s supply capacity is very high,” he said. The Middle East accounted for 93% of Japan’s oil imports in 2021.

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On Friday, Marubeni Corp . trading company (8002.T) It said it wants to withdraw from the Sakhalin-1 oil project but keeps its stake in line with government policy. Read more

On Monday, Kishida said there had been no change in the government’s policy of maintaining commercial interests in various Russian energy assets.

PAJ’s Okuda said that it would be better to preserve the concessions given Japan’s energy situation, and it would be unwise to give them up and let China or others take them because Japan has the concessions under good conditions.

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Additional reporting by Yoshifumi Takemoto and Yuka Obayashi; Written by Leika Kihara and David Dolan; Editing by Lincoln Fest, Himani Sarkar and Kenneth Maxwell

Our criteria: Thomson Reuters Trust Principles.

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