Japan to revise laws to ensure stable LNG supply, demand in emergency

Japan's Cabinet approved Friday bills to revise laws to ensure stable supply and demand of liquefied natural gas in the event of an energy contingency, amid procurement concerns driven by the Russian offensive in Ukraine.

Partial revisions to the gas business law and the law for Japan Oil, Gas and Metals National Corp. will allow the industry minister to request the government-backed agency to procure LNG when the private sector faces difficulties doing so.

The minister will also be enabled to order large companies to restrict gas usage when the supply-demand balance becomes tight.

"We will work for the early enactment (of the bills)," Economy, Trade and Industry Minister Yasutoshi Nishimura said at a press conference.

The government aims to submit the bills during the ongoing Diet session "as soon as possible" and the revised laws will come into force within two months of their enactment, an industry ministry official said.

Regarding gas usage restrictions during an emergency, socially essential facilities such as hospitals and sewage systems are expected to be fully or partially exempted, according to the ministry.

Japan uses LNG for power generation and city gas services, but its price has been soaring as competition in the global LNG market has intensified since Russia's invasion of Ukraine.

Last week, Russian President Vladimir Putin signed a decree to create a new operating company to take over the Sakhalin 1 oil and gas project. Foreign stakeholders including the Japanese government and firms will be asked to declare if they wish to remain part of the project within a month of the establishment of the new company.

The government is gathering and analyzing information, including whether the new operating company has already been established, Nishimura said.

In a similar move, Russia has already set up a new operator for the Sakhalin 2 project, which accounts for around 9 percent of Japan's liquefied natural gas imports. Japanese trading houses Mitsui & Co. and Mitsubishi Corp. are continuing to participate in the project.

Japan, which is highly dependent on energy imports, intends to maintain stakes in both projects in the Russian Far East, even as Tokyo has joined the United States and European countries in imposing economic sanctions on Russia over its invasion of Ukraine.

Major U.S. stakeholder Exxon Mobil Corp. in March announced its withdrawal from Sakhalin 1, while British oil major Shell PLC has exited from Sakhalin 2.

© Kyodo News