Tokyo Report | Economy | East Asia

Japan Faces Hard Choices in Weaning off Russian Energy

Beyond the question of energy security, Tokyo may want to avoid antagonizing Russia further by cutting off LNG purchases.

The Prigorodnoye Production Complexof the Sakhalin-II LNG Project, located in Korsakov City District of Sakhalin Oblast, Russia.

Japan is one of the most energy-insecure countries in the world relative to the size of its population and economy. Liquified natural gas (LNG) accounts for 30 percent of its electricity generation, and Japan imports more than 97 percent of its total LNG. Japan’s supplies of crude oil and coal are almost 100 percent imported.

Successive energy shocks produced by Russia’s invasion of Ukraine and the closure of the Strait of Hormuz have raised household costs and depressed growth. The International Energy Agency forecast that Japanese electricity prices for the second half of 2026 will surge 40 percent year-on-year, compared to only 25 percent for the European Union. 

This context helps to explain why Japan has continued to resist pressure from the United States to phase out its procurement of Russian LNG from the Sakhalin-II project in the Russian Far East. The Takaichi government justifies its stance by asserting that Russian LNG plays an “extremely important role” in Japan’s energy security. 

Domestic gas industry leaders warn that efforts to substitute the 5 million tonnes of LNG Japan buys from Russia annually – amounting to 9 percent of its total LNG imports – would risk supply shortages and increased costs for consumers. Cargoes from Sakhalin Island reach Japan in only two or three days, resulting in significantly lower transport costs compared to the seven days for Australian LNG and 20-40 days from the U.S. Gulf Coast. As Japanese households strain under a continuing cost-of-living crunch, there is little political appetite in Tokyo for measures that could add to that pain.

This June, the U.S. Treasury extended Japan’s sanctions waiver for purchases of Russian LNG until the end of 2026, marking the fifth extension since restrictions were introduced in 2022. However, Tokyo’s lobbying for exemptions is unlikely to succeed indefinitely. Officials must plan for the possibility that sooner or later, patience in Washington will run out. 

Does the Takaichi administration have the stomach to make a major break with Russia? A litmus test came in August with Russian President Vladimir Putin’s unprecedented visit to one of the four disputed Kuril Islands controlled by Russia. Japan regards the islands as “illegally occupied” and the dispute remains the main reason both sides have never signed a formal treaty ending World War II. Given the importance of the issue to Japanese foreign policy, Putin’s incendiary move demanded a forceful reply.

Instead, Takaichi’s response – calling the visit “absolutely unacceptable” and saying it had “hurt the public sentiment of the Japanese people” – was panned domestically as weak and inadequate. The government announced it was weighing further economic sanctions and........

© The Diplomat