The Japanese government will propose wide-ranging cooperation in the energy sector with Moscow that could even include investment in a Russian state-owned oil giant, as Tokyo looks to strengthen economic ties and possibly spur progress over a decades-long territorial dispute.
Japan presented an eight-point plan for economic cooperation to Russia in May including partnerships in energy, the development of small and midsize businesses and industrial diversification. With Prime Minister Shinzo Abe visiting Russia on Friday, Tokyo seeks to craft a framework for even stronger energy-related partnerships.
Japan will consider joint surveys for oil and gas projects in Eastern Siberia and the Russian Far East. Resource development projects in the Arctic Ocean would violate sanctions imposed on Russia by the U.S. and other nations, so Japan will focus on Russia’s resource-rich eastern regions.
Proposals for nuclear energy involve joining Japanese and Russian know-how through technical partnerships, personnel exchanges and other measures. Technical cooperation will be sought in decommissioning the Fukushima Daiichi power plant, the site of Japan’s 2011 nuclear disaster.
Japan and Russia also are expected to bolster cooperation on renewable energy, such as in constructing wind farms and producing hydrogen.
Japan’s Ministry of Economy, Trade and Industry is considering investing up to 1 trillion yen ($9.68 billion) in Russian oil company Rosneft through the government-backed Japan Oil, Gas and Metals National Corp., known as Jogmec.
Under this scenario, Jogmec would buy about 10% of Rosneft’s outstanding stock. The cabinet will submit a bill to let Jogmec unilaterally invest in foreign, state-owned resource companies during an extraordinary Diet session starting at the end of the month. The deal would be funded through government-guaranteed loans and other means.
A plunge in resource prices has squeezed the Russian government’s finances. Moscow looks to unload 19.5% of Rosneft out of its roughly 70% stake, and likely will announce the terms of sale by the end of the month. METI hopes to gain the right of first refusal to Rosneft’s best resource projects through purchasing its shares.
Japan relies heavily on the Middle East for its energy needs, with roughly 80% of crude oil imports coming from countries such as Saudi Arabia and the United Arab Emirates. Strengthening resource development with Russia would help to limit Japan’s economic exposure from Mideast instability.
Tokyo also hopes that stronger economic ties will encourage Moscow toward negotiations over the southernmost Kuril Islands, which Japan claims as its own. An economic partnership with Russia “is important for Japan’s growth strategy,” METI Minister Hiroshige Seko said Thursday. He was appointed minister for economic cooperation with Russia earlier that day.