Japan's LNG Contracts with Russia Near Expiration

As Japan's long-term contracts for liquefied natural gas (LNG) from Russia's Sakhalin-2 project near expiration, the country faces declining demand for gas and increasing geopolitical pressure to reduce its reliance on Russian energy. Japan, the second-largest LNG buyer globally, currently depends on Russia for 9% of its LNG supplies, primarily from the Sakhalin-2 project operated by Gazprom, with significant stakes held by Japanese trading companies Mitsui and Mitsubishi. However, with Western allies urging nations to isolate Russia amidst the ongoing conflict in Ukraine, the Sakhalin-2 project is becoming less favorable, despite being exempt from U.S. sanctions. Japan aims to shift towards cleaner energy, targeting a decrease in gas's share of power generation from 33% to 20% by 2030, while increasing renewables from 26% to 38%. The future of Sakhalin-2 contracts remains uncertain as Japanese buyers weigh their options against the backdrop of changing energy policies and supply dynamics.