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May 7, 2012

[SSJ: 7440] Re: A couple of reasons why the electricity has kept flowing despite the nuclear shutdowns

From: Jun Okumura
Date: 2012/05/07

James David Brown writes:

"If I understand correctly, Jun Okumura would like me to provide examples of energy projects that have been developed by Japan and Russia but subsequently scuppered by the countries' poor political relations."
(2012/04/24)

That would be nice, but I'd be more than happy to settle for a half-way credible report-no anonymous 2-chan rants or unsourced blogposts-that indicates that Russia hardened its position towards Japan regarding any existing or potential energy projects or that Japan hesitated to move forward on any such projects due to the Northern Territories issue. In the meantime, the following are a couple of reasons why Japan's uptake from Russian gas fields is not higher than it actually
is:

1) Russia is a difficult place to do business in,
particularly in the strategically and politically sensitive mineral extraction industry. Japanese firms have been burned before by the unpleasant mix of resource nationalism and lack of rule of law. Places like Qatar, Australia, and Borneo has offered far more predictable and conducive business environments.
2) The Japanese economy stalled in the 90s and the
aughts, keeping energy demand down and diminishing the need for new LNG sources.

Japan obviously has needed (and is securing) additional LNG since 3.11, but I suspect that Japanese businesses and government authorities will wait till the domestic nuclear picture (i.e. how many come back online) and the global natural gas outlook (e.g. the near future of unconventional gas) comes into better focus before making decisions regarding additional overseas commitments.

I retract my comment about Russia not caring. That was careless of me. Words have domestic repercussions in Russia, particularly with the Putin regime looking more vulnerable than it has ever been. And there could be more occasions in the future with potential for comments from Japanese officials that invite similar responses from the Russian side. That said, the pro-US defense hawk Seiji Maehara's Golden Week visit to Russia indicates that the DPJ very much prefers a soft power approach to the Northern Territories issue.

Approved by ssjmod at 11:45 AM