For Japan’s Leader, Russian Gas Is Also a Hometown Affair

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Prime Minister Fumio Kishida defends energy deals with Moscow that supply his constituents

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The situation is particularly acute in Hiroshima prefecture (state), part of which Mr. Kishida represents in Parliament. Hiroshima Gas Co.

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gets about half its gas from Russia, a much higher proportion than the rest of Japan.

It is one example of how the web of connections between Russia and the global economy make it hard for leaders of democracies to punish Mr. Putin for the Ukraine invasion without blowback at home. German Chancellor Olaf Scholz has ruled out canceling its Russian energy deals for now, saying that would plunge all of Europe into recession.

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Western companies continue to sell products like cosmetics and ice cream in Russia, while Japan Tobacco Inc.,

one-third owned by the Japanese government, is keeping its large Russian cigarette business.

Japan imports most of its energy, including natural gas from the Russian island of Sakhalin in the Far East just north of Japan. At a news conference on March 16, Mr. Kishida was asked about the Sakhalin gas field and responded, “In terms of stable supply of energy, I view this as an important project for our nation.”

Overall, Japan gets about 9% of its natural gas from Russia. But Hiroshima Gas Co. committed itself more deeply to Moscow in a 2006 deal under which it is importing up to 210,000 tons of liquefied natural gas from Sakhalin every year from 2008 to 2028. The company says that contract accounts for about half the gas it needs annually.

A Hiroshima Gas were said supplies from Sakhalin coming in normally. The company is watching the situation and planning for alternatives should Russian gas be cut off, he said.

Hiroshima Gas is based in the central Hiroshima city district represented since the 1990s by Mr. Kishida. Starting in 2009, Hiroshima Gas executive Hideki Fukayama, then president and chairman, donated 240,000, equivalent to $2,000, each year to the ruling Liberal Democratic Party’s political organization in the district, which is headed by Mr. Kishida.

After Mr. Fukayama retired as chairman in June 2017, he halted his donations and the new chairman, Kozo Tamura, started donating at the same $2,000-a-year pace through 2020, the most recent year for which records are available. Mr. Tamura was one of only three individuals in that year to donate more than $500.

Hiroshima Gas and a representative of Mr. Kishida said the donations were personal and had nothing to do with the company’s business. The donations were within legal limits and reported as required by the ruling party. The company declined to make Mr. Tamura available for comment, and calls to numbers listed for him and Mr. Fukayama weren’t answered.

Japan paid more than $3 billion for Russian gas in 2021. If it had to replace that with supplies purchased at current sky-high spot prices, it would cost many more billions, analysts say.

“The economic consequences would be forbidding,” said Rystad energy analyst Kaushal Ramesh. He observed that Sakhalin gas is also convenient, taking just two days to get to Japanese ports, compared with more than a month for many American shipments.

Already, a typical household in Tokyo is paying about 30% more for electricity than in early 2021 because of high prices for natural gas and other fuels that fire power plants.

The prime minister’s aides rejected the notion that Japan’s purchases from Russia amounted to significant support for Mr. Putin’s war machine. One aide said the Japanese money is less than a 10th of what European nations are paying. The aide said if Japan canceled its contracts, other buyers such as China would step in to buy the gas, perhaps at a higher price than Japan had locked in.

“It would be more like sanctions on Japan than sanctions on Russia,” he said.

Japanese media have generally been sympathetic to that view. One commentator, Sohei Ide of Kyodo News, dissented, saying that with some conservation of electricity Japan could do without Russian energy. “Isn’t this a cost we should pay to protect the international order that required such great sacrifices to build?” Mr. Ide wrote in a commentary.

The energy trade has been one of the few areas of cooperation between Japan and Russia amid a long-running dispute over islands seized from Japan by Soviet troops at the end of World War II. Former Prime Minister Shinzo Abe met Mr. Putin more than two dozen times in a fruitless effort to strike a deal. On March 21, Russia’s Foreign Ministry, citing Japan’s sanctions, said it was ending the talks.

Write to Peter Landers at [email protected]

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Credit: www.Businesshala.com /

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