Russia is looking to Asia’s major energy importers as a buffer from U.S. sanctions while boosting Arctic production of liquefied natural gas (LNG) to counter growing American competition, Nikkei writes.
Late last month, independent gas producer Novatek agreed to sell a 10% stake in its Arctic LNG 2 terminal to Japanese trading house Mitsui & Co. and state-owned Japan Oil, Gas and Metals National Corp.
The terminal is scheduled to go online by 2023 and will supply Japan with 2 million tons of LNG annually — about 10% of the facility’s capacity. Two Chinese companies — China National Oil and Gas Exploration and Development Corp. and China National Offshore Oil Corp. — have a 20% stake in the project.
Analysts surveyed by Nikkei say Russia wants closer cooperation with Japan and China in developing natural gas reserves, and establishing more buyers in Asia will help insulate its companies against additional Western sanctions.
“U.S. sanctions against Russia are likely to expand this year and many international investors, particularly in the West, are watching developments closely so they are not caught up in the new sanctions measures,” said Elizabeth Rosenberg, senior fellow and director of the Energy, Economics and Security program at the Center for a New American Security, a Washington-based think tank.
The U.S. has already threatened sanctions on the Nord Stream 2 natural gas pipeline currently under construction in Europe, saying it increases the region’s energy dependence on Russia.
That threat makes the turn to Asia more urgent. Securing sales in Japan is very significant for Russia, and lower liquefaction costs in colder regions will make Russia’s Arctic gas competitive, according to Andrey Polishchuk, an analyst at Raiffeisen Bank in Moscow.
“The fact that companies have been able to attract investment, regardless of whether or not there are sanctions, shows the optimism about these projects,” he added.