— Strategic Realism under Sanctions —
Wrote By:Global Economist
1. Current Situation and Japan’s Dependence
The Sakhalin-2 Project—located in southern Sakhalin, Russia’s Far East—has long been a cornerstone of Japan’s LNG imports and a critical component of its energy security.
As of 2025, around 9–10 % of Japan’s total LNG imports come from Russia, with Sakhalin-2 accounting for the vast majority.
- Key stakeholders: Mitsui & Co., Mitsubishi Corp., JERA, Tokyo Gas, Osaka Gas
- Contract terms: Most contracts expire between 2028 and 2033
- Logistics advantage: Short shipping routes and low transport costs make Sakhalin-2 economically indispensable
2. Sanctions and Diplomatic Pressure: The Double Bind
Since 2025, the United States and the European Union have intensified sanctions on Russian energy producers such as Rosneft and Lukoil.
Japan, while aligned with the Western alliance, faces a dilemma between solidarity and survival.
- U.S. pressure: Calls for an “immediate halt” to Russian energy purchases
- Japan’s official stance: Industry Minister Yoji Muto stated that Tokyo will “act in accordance with national interests.”
- Pragmatic workaround: Japanese importers have avoided transactions via Gazprombank (under U.S. sanctions), using alternative financial channels to maintain compliance
This demonstrates Japan’s two-layered approach—formal participation in sanctions while substantively maintaining essential energy inflows.
3. Business Sector Response: Rational Continuity
Japan’s energy and trading conglomerates view Sakhalin-2 as a strategic asset too vital to abandon immediately.
- Mitsui & Co. and Mitsubishi Corp. have retained their 22.5 % combined equity stake.
- Power and gas utilities continue contractual LNG liftings.
- Firms have enhanced compliance to navigate payment, insurance, and logistics risks under sanctions.
The rationale is clear: substituting Sakhalin-2 LNG would sharply raise costs.
Japan’s Ministry of Economy, Trade and Industry (METI) estimates that replacing Russian LNG with U.S. or Middle-Eastern supplies could drive electricity prices up 20–30 %, adding billions of dollars annually to national energy costs.
4. Structural Shifts in the Global LNG Market
Following the war-related sanctions, global LNG supply tightened.
Europe’s surge in Middle-Eastern and African imports pushed Asian prices higher.
Hence, an abrupt “ethical exit” from Russian LNG would trigger a price shock and supply squeeze.
- European LNG spot prices: roughly three times higher than in 2021
- Long-term contracts: increasingly 10- to 15-year tenors
- Non-Russian producers (Qatar, U.S., Australia): operating near full export capacity
No realistic short-term substitute currently exists for Sakhalin-2 volumes.
5. Japan’s Phased Exit Strategy
Japan’s roadmap can be outlined in three phases:
| Phase | Policy Direction | Timeframe | Strategic Goal |
|---|---|---|---|
| 1 | Maintain supply while complying with sanctions | – 2026 | Stability and risk control |
| 2 | Secure diversified LNG contracts | 2026–2028 | Expand imports from U.S., Middle East |
| 3 | Gradual disengagement & energy transition | 2028–2035 | Reduce LNG dependence, expand renewables |
Tokyo aims to balance sanction compliance and energy security through a three-pillar approach:
(1) nuclear restarts, (2) renewable expansion, and (3) diversified long-term LNG supply.
6. Strategic Realism: Japan’s Calculated Choice
Japan’s continued participation in Sakhalin-2 may appear politically awkward, yet from an energy-security and industrial perspective it remains a rational and necessary choice.
Trade-offs:
- Immediate withdrawal → higher consumer bills, weakened industrial competitiveness
- Phased retention → diplomatic friction, reputational cost
Ultimately, geopolitics runs on energy, not ethics.
Japan’s path forward is strategic realism with transparency—maintaining supply today to secure independence tomorrow.
Executive Summary
- Japan’s dependence on Russian LNG: ≈ 9–10 %, primarily from Sakhalin-2.
- Tokyo and major firms pursue a dual strategy—formal sanction alignment but continued imports for national security.
- Replacing Sakhalin-2 would cost billions annually and raise electricity prices by up to 30 %.
- Long-term policy: phased exit, supply diversification, and renewable expansion by the early 2030s.
- Japan’s corporate sector operates under a pragmatic realism, balancing sanctions compliance with energy stability.
