Russia may play important part in Japan’s energy: IEE

Interview article by Pearl Bantillo

SINGAPORE (ICIS)–Gas-rich Russia may play an important role in Japan’s efforts to ensure energy security, possibly through a direct gas pipeline between the two countries, an official from The Institute of Energy Economics (IEE) of Japan said on Monday.

“We think Russia as an important player. Russia has recently decided to sell gas to China – this is not bad for Japan. It is a good thing,” IEE Japan global associate Nobuo Tanaka, who was a former executive director of International Energy Agency (IEA), told ICIS in an interview at the sidelines of the Singapore International Energy Week (SIEW).

“Russia will deploy the pipeline to China that pipeline could be extended to the Pacific Coast – that gives opportunity for Japan to get gas … or even directly connecting Japan and Russia,” he said.

With all its nuclear reactors currently shut in the wake of the Fukushima nuclear crisis in March 2011, Japan has an urgent need to diversify its energy mix.

“Japan is now importing gas 100%… I think if we can connect a pipeline with Russia, that will help the diversification [of energy sources for the country],” Tanaka said.

Japan has been importing gas from Russia and this has not been affected by the international sanctions on Russia so far.

“Certainly, international sanctions coordinated by the G7 is a concern for the long term,” according to the former executive director of International Energy Agency (IEA).

G7 includes Canada, France, Germany, Italy, Japan, UK and the US.

Financial sanctions were first imposed on Russia over its incursion into the Crimean region of Ukraine in March this year. Subsequently more sanctions by the US and Europe were imposed on Russia during the year.

“Current trades has not been impacted at all [by the sanctions]…. But future investments may be undermined. That is not only a concern of Japan but also of other companies like Exxon, Total, Shell,” he said.

Japan is also moving towards increasing the share of other renewables – wind and solar power – in its energy mix, as well as that of coal as suggested by power companies, but will still need to rely on nuclear power for a sizeable chunk of its energy requirement.

Unlike Germany, Japan will not be able to completely phase out nuclear power plants, which accounted for about 30% the northeast Asian country’s energy mix, Tanaka said.

“Germany is part of Europe. If necessary, it can import power from France. Also because of this connectivity, much more utilization of renewable energy is possible,” he said.

“This big market is the reason why Germany can phase out nuclear. But Japan cannot – there are nine separate monopolies [regional power companies in the country] and interconnection is poor,” he said.

Additional reporting by James Dennis