According to recent shipping data cited by Bloomberg, Russian shipments of liquefied natural gas (LNG) to Asia decreased by 15% last month, reaching their lowest level in nearly two years. This decline in imports can be attributed to importers seeking to diversify their LNG supplies in North Asia, resulting in major LNG buyers from the region cutting imports from Russia.
The report also states that at least two Japanese companies have requested their suppliers to reduce shipments from Russian energy ventures. While Russian LNG exports are not subject to international sanctions, some Asian consumers are cautious due to government scrutiny and potential risks related to payments or shipping.
South Korean firms have reportedly stopped buying Russian LNG from the spot market, as sources familiar with the matter have revealed. Similarly, China, which has become a leading consumer of Russian energy, has also decreased its LNG purchases from Russia. In June, shipments from Russia to China were halved compared to May, reaching their lowest level in almost a year.
Despite these declines in LNG imports from Russia, long-term importers of the Sakhalin-2 LNG project in Russia’s Far East, including Japan and South Korea, have continued to purchase gas from the venture. This is especially true for Japanese trading house Mitsui & Co, which has no plans to exit Sakhalin-2. According to Mitsui’s senior executive managing officer, Toru Matsui, the project plays a vital role in securing stable natural gas supplies for Japan.
The reduction in imports from Russia is driven by the desire of North Asian countries to diversify their LNG supplies. This trend is likely a response to the ample current supply of LNG in the market, which has reduced the need for heavy reliance on a single supplier. Additionally, concerns about government scrutiny and potential risks associated with payments or shipping may also be influencing import decisions.
As the largest consumers of Russian LNG, Japan and South Korea’s continued involvement in the Sakhalin-2 LNG project showcases the importance of this venture in meeting their long-term natural gas needs. Despite Western majors like British Shell opting to leave the project following Moscow’s military operation in Ukraine, the Japanese trading house Mitsui & Co recognizes the significance of Sakhalin-2 in ensuring stable natural gas supplies for Japan.
In conclusion, Russian LNG exports to Asia have declined significantly due to importers diversifying their supplies and concerns about government scrutiny and potential risks. However, long-term importers like Japan and South Korea continue to source LNG from the Sakhalin-2 project, emphasizing its importance in meeting their gas demands.