Mitsubishi Corp 8058.T CEO Katsuya Nakanishi said on Tuesday that Russia’s Sakhalin 2 liquefied natural gas (LNG) project remains a key source for Japan’s energy supply, as Japanese companies maintain their Russian exposure.

Although Japan has reduced its Russian energy imports since Moscow’s invasion of Ukraine in February 2022, it has kept stakes in several fossil fuel projects in the country for its energy security.

“The project is an extremely important source in terms of stable energy supply for Japan,” Nakanishi, whose company holds a 10% stake in the Gazprom-led GAZP.MM Sakhalin-2 LNG project in Russia’s far east, told a briefing.

“We are carefully watching the situation,” he added.

Japan reduced LNG purchases from Russia by 11% last year to 6.1 million metric tons, with supplies otherwise dominated by Australia and Malaysia. Moscow remains Japan’s third biggest LNG supplier with a 9% share last year.

The United States, Japan’s closest ally and from whom it has increased LNG purchases by nearly 34% last year, has recently paused approvals for new LNG export licences.

Last week, Japan’s Mitsui & Co 8031.T said it has put aside 13.6 billion yen ($91 million) in additional provisions on its minority stake in the U.S.-sanctioned Arctic LNG 2 project led by Russian private gas producer Novatek NVTK.MM.

Trading house Itochu 8001.T, a co-owner of a mid-sized Siberian oil producer INK-ZAPAD, recorded 2.8 billion yen profit from its stake in the project in April-December, more than last fiscal year as a whole, a presentation showed on Monday.

Sources told Reuters last week that Itochu was in talks to buy out Inpex Corp 1605.T, Japan’s top oil and gas explorer, from the Japan South Sakha Oil Co Ltd, a consortium of Japanese firms running INK-ZAPAD together with private Russian owners.
Source: Reuters (Reporting by Yuka Obayashi and Katya Golubkova; Editing by Alexander Smith)