Purchasers In Japan And South Korea Have Not Yet Been Requested To Pay Roubles For Russian LNG Supplies

After a senior management at gas producer Gazprom announced a plan to broaden the payment arrangement, major Asian customers of Russian liquefied natural gas (LNG) claimed they had yet to receive requests to pay for supply in Russian roubles.

The idea comes only days after Russia took control of the Sakhalin-2 LNG project in retaliation for Western sanctions, creating supply fears for big consumers such as Japan and South Korea.

Russia has already sought rouble payments from European oil and gas purchasers as its economy faces the worst crisis since the Soviet Union’s demise in 1991, cut off from the global banking system.

Receiving money in roubles for energy exports allows Moscow to avoid sanctions and fund its “special military operation” in Ukraine.

Kirill Polous, a deputy department head at Gazprom, told Interfax on Monday that the Russian gas firm has proposed expanding its rouble-for-gas scheme to include liquefied natural gas (LNG).

However, JERA, Japan’s largest LNG importer, Kyushu Electric, and South Korea’s state-owned Korea Gas Corp stated they had yet to receive a request to pay for LNG imports in roubles.

According to a Kyushu Electric representative, if the payment currency changes, the company’s LNG contract will need to be updated.

When asked if the city gas supplier had received a request for rouble payment, another Japanese buyer, Tokyo Gas, declined to comment, citing a confidentiality clause in its Sakhalin-2 LNG agreement.

According to a spokeswoman, a third buyer, Osaka Gas, is gathering information.

Sakhalin Energy Investment Company, in which Gazprom owns 50%, Shell 27.5 per cent, Mitsui 12.5 per cent, and Mitsubishi Corp 10 per cent, has long-term contracts with the firms.

Russia accounts for around 8% of worldwide LNG supply, with Sakhalin-2 and Novatek’s Yamal LNG, Russia’s largest LNG plant, producing 40 billion cubic metres of super-cooled gas each year.

Japanese utilities are buying 60 per cent of the LNG produced at the Sakhalin-2 project, followed by South Korea’s state-owned Korea Gas Corp and Taiwan’s CPC.

According to the KOGAS spokeswoman, Russian supplies account for 6% of South Korea’s LNG imports. Taiwan’s Economy Ministry announced that the state-owned refiner CPC’s five-year contract to directly purchase LNG from Russia has expired.

According to the ministry, the corporation has already sought alternative sources “so there are no rouble purchase or settlement concerns involved.” According to Refinitiv statistics, CPC imported two cargoes from Sakhalin and Yamal that were discharged in June.

China’s CNPC, Gazprom Marketing & Trading, Naturgy, Novatek, and TotalEnergies are among the long-term LNG buyers from the Yamal project.

According to Tilak Doshi, general director of Doshi Consulting, the plan should not come as a surprise because it makes all payments for gas, whether piped or as LNG, payable by Gazprom in roubles at its discretion.

“It would seem that the Russian ‘gas for roubles’ scheme was directed primarily at the European Union and United States for their unilateral expropriation of Russian foreign exchange reserves, and not at Asian LNG customers, such as South Korea and Japan, who are important purchasers of Russia’s LNG,” he added.

(Adapted from ChannelNewsAsia.com)

Categories: Economy & Finance, Geopolitics, Regulations & Legal, Strategy, Sustainability

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