Japan claims that replacing LNG from Sakhalin-2 in Russia would be expensive.

Japan's Industry Minister said that replacing the liquefied natural gas from Russia's Sakhalin-2 Project would be expensive and lead to higher electricity rates.

Scott Bessent, U.S. Treasury secretary, has urged Tokyo, ahead of U.S. president Donald Trump's trip to Japan next Monday, to cease its Russian energy purchases. These mainly include LNG, which accounts for 9% or Japan's fuel imports.

Ryosei Takazawa, 64-year old trade veteran, appointed minister of economy and trade under the new prime minister Sanae Taichi, said to reporters that Asia's market for LNG was expected be tight.

The majority of Japan's SAKHALIN-2 contracts run to 2028-2033

Akazawa led the recent Japan-U.S. talks that resulted U.S. tariff cuts on imported goods from Japan.

The majority of Japan's Sakhalin-2 contracts expire in 2028-2033. An earlier termination could result in fines and force Japanese buyers to look for alternative supplies on the market. Options may be limited because of high competition.

Akazawa stated that he was willing to work with the Group of Seven as well as other parties in order to determine what is best for Japan's interests. Japan imports fossil fuels to meet most of its energy requirements.

Japan, while minimizing political pressures, signed new U.S. LNG purchases this year. However it did not make any firm commitments regarding the $44 billion yet to be built Alaska LNG project that Trump has backed.

JERA, Japan’s largest power company, announced on Thursday that it will buy U.S. natural gas production assets for $1.5 billion. This marks JERA's entry into American shale production, where other Japanese companies already have a presence. Reporting by Ritsuko Shimimizu. Katya Golubkova wrote the article. Tomasz Janowski and Mark Potter (Editing)

(source: Reuters)