Japan, US back 'initiative' to help Asia wean itself off Russian energy

Japanese Prime Minister Fumio Kishida and the US President Joe Biden agreed May 23 to explore "an initiative" to help reduce Asian countries' dependency on Russian energy.

"Japan and the US will jointly explore in detail about how the countries will be able to support reducing Asia's dependency on Russian energy," a Japanese government source told S&P Global Commodity Insights.

The agreement was reached during a summit meeting in Tokyo on May 23, when the two leaders condemned Russia's actions against Ukraine and reaffirmed their support for Ukraine's sovereignty and territorial integrity.

Kishida and Biden also underscored the importance of the international community's unity, and expressed solidarity with the Ukrainian people in responding to Russia's aggression through sanctions, including financial sanctions, export controls, and other steps, taken with like-minded countries to impose long-lasting economic costs on Russia, according to a joint statement.

"Building on the G7 countries' commitment to reduce dependence on Russian energy, the two leaders shared their intention to explore an initiative to provide Asian partners with support for strengthening their energy security," the two leaders said in the joint statement.

The latest effort by Tokyo and Washington to reduce Russian energy dependency comes as some countries in Asia appear to be taking advantage of discounted Russian commodities, while the G7 countries are stepping up their sanctions on Russian energy.

Kishida said May 9 that Japan will ban "in principle" Russian oil imports following the latest commitment by leaders of the G7.

G7 leaders agreed May 8 to phase out Russian energy, including oil, "in a timely and orderly fashion," while ensuring "stable and sustainable global energy supplies and affordable prices for consumers."

Tokyo's latest move comes a month after the government's decision April 8 to ban Russian coal imports in phases as part of an earlier commitment by G7 nations.

Japan and the EU also agreed on May 12 to cooperate and help each other's security of LNG supply, and work together to reduce Europe's dependency on Russian energy supply by ensuring diversification through necessary investments.

The EU has pledged to phase out all Russian fossil fuel imports by 2027, with a total ban on Russian coal imports set to take effect in August this year. The EU has also proposed to phase out oil and oil product imports by the end of 2022, though some member states remain opposed to the embargo, including Hungary.

US LNG

While recognizing global efforts to secure stable energy and food supplies, which are threatened by the impact of Russia's aggression against Ukraine, the two leaders confirmed their commitment to work bilaterally and multilaterally on energy and food security, and to cooperate with international organizations such as the International Energy Agency to promote clean energy and mitigate the impact of the disruption in energy supplies, especially on developing countries, according to the joint statement.

Kishida also emphasized the significant role US LNG plays in alleviating global supply constraints and welcomed investment by US industry to increase oil and natural gas production.

The Japanese premier's comments came as Japan is considering providing public finance to help expand US LNG projects, Minister of Economy, Trade and Industry Koichi Hagiuda said May 10, as the country moves to phase out its dependency on Russian energy.

"Japan intends to contribute to starting up these US projects with public financial support and proceed to cooperate with the US in order to stabilize global LNG supply," Hagiuda told a press conference.

The US, Japan's fourth largest LNG supplier in 2021, accounted for roughly 10% of Japan's total LNG imports of 74.32 million mt, while Russia supplied 9% of Japan's LNG imports as the fifth largest supplier, data from the Ministry of Finance showed.

Kishida and Biden recognized the importance of nuclear energy as a critical and reliable source of carbon-free electricity and process heat, according to the joint statement.

The two leaders committed to greater nuclear energy collaboration and to accelerated development and global deployment of advanced and small modular reactors by jointly using export promotion and capacity building tools, according to the joint statement.

The leaders also concurred to work together to create more resilient nuclear supply chains, including uranium fuel, for both existing and new reactors.