Sunday, April 27, 2008

An Energy Eye on Russia: Week 6/ Japan - Russia Relations and the G8

Japanese Prime Minister Yasuo Fukuda met Russian Presidents Vladimir Putin and Dmitry Medvedev in Moscow yesterday to discuss many issues of interest to Japan. From various news articles, the headlines seem to center on one of two issues:
1) Return of the Kurile Islands taken by Russia in WWII (delicious fish for the Japanese and energy access for the Russians)
2) Backing a better Climate Change initiative at the G8

Most articles seemed to be more interested in the touchy subject of land. But I was interested in the Energy issues, of course. So I found the list of possible issues on Reuters. They listed 7 separate key issues, 4 were fuel related, 2 more were energy related (if you count the islands as being useful for energy) and the final key was Japan's endeavour to make their hosting of the G8 Summit in July a success by creating a successful Kyoto Protocal.

We might remember some of the fuel issues from a previous post I made about pirates. Sakhalin Energy has sold almost 60% of it's energy to Japana, the rest going to the N. American West Coast and South Korea. Reuters says Japan wants more of Sakhalin-2 and Gazprom wants all of the gas export from Sakhalin-1. Both sites are joint projects between Japanese partners and Gazprom as well as companies like Shell and Exxon. However, Russia has already pressured sale of part of the Sakhalin-2 project from Japan and Shell. (I think Gazprom is a big bully. Russia likes to pressure people into selling things. In case you didn't see the latest rule for the Sochi Olympic Games.)

Also, there was mention of Japan is in competition with China for oil to come from Siberia in the next decade. Today, Bloomberg reported that Japan has made a deal to explore and transport the oil from Siberia to East Asia.

Japan said it wanted to strengthen ties with Russia, but it looks fairly tilted towards energy resources. Additionally, in regards to the G8. Japan may just want to cut some pre-deals with Russia. Currently, according to Reuters, Russia has a surplus of carbon credits under the current Kyoto protocol- credits that Japan needs to meet their targets.

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