Japan’s Energy Strategy Crumbles
Most of the attention given to the Sakhalin heist, the event which brought the full weight of the environmental regulatory agency of the Russian state to bear upon foreign investors to exact concessions for state-held firms, concentrated on the Kremlin’s willingness to turn the word Yukos into a verb, and apply the method to foreign companies. While most observers have looked to the surrender of Royal Dutch Shell, another victim has also quietly suffered. The Sakhalin experience is partly to blame for Japan’s failure to wean itself off Middle Eastern oil – a trend experienced by many other nations who have found themselves victim to the ever decreasing environment for competition, and the global energy market carve-up by major exporters.
Dear Sakhalin, wish you were here
From the FT:
Speaking in Saudi Arabia, which alone accounts for 30 per cent of Tokyo’s oil imports, Mr Abe said: “We do not need any words to say how important the Middle East is for Japan.” Launching his so-called “look east policy”, he called for a “new era of Japan’s relations”. Behind the rhetoric lies the failure of Japan’s recent energy strategy. Projects intended to wean Japan off traditional Gulf suppliers have come unstuck. Last October its 75 per cent stake in Iran’s Azadegan oilfield, a project on which it had devoted years of painstaking diplomatic effort, was slashed to 10 per cent. Something similar happened in Sakhalin, in far eastern Russia, where Mitsui and Mitsubishi have been forced by the Kremlin to dilute their stakes in a massive liquefied natural gas project. A pipeline Japanese bureaucrats had hoped would bring oil from Siberia to within short shipping distance of Japan appears more likely to go to China, now a formidable global competitor for energy resources.
