Japan’s LNG Buyers Hedge Against Sakhalin-2 Risk
Japanese utilities JERA and Tohoku Electric say they can replace Sakhalin-2 LNG if disrupted, balancing U.S. pressure to cut Russian imports with energy-security demands. Tokyo warns a halt could raise electricity prices and strain Takaichi’s cost agenda.
Japan’s two largest power utilities, JERA and Tohoku Electric Power, are positioning themselves to withstand potential disruption to Russian LNG flows from the Sakhalin-2 project, signaling a pragmatic balance between U.S. geopolitical pressure and Japan’s domestic energy stability. Executives from both companies said they could source alternative supplies if Russian deliveries were interrupted, softening the risk of energy insecurity even as Washington pushes allies to phase out Russian energy imports.
Sakhalin-2 accounts for roughly 9 percent of Japan’s LNG imports, anchored by long-term contracts extending through 2029 for JERA and 2030 for Tohoku. JERA alone lifts about 2 million tonnes of LNG per year under two contracts, but with total trading volumes of 30–35 million tonnes annually, the utility’s diversified portfolio and access to global spot markets give it flexibility to replace lost cargoes. “There is a good chance that we will be able to do something,” said JERA executive Naohiro Maekawa, noting, however, that preserving existing long-term contracts remains critical for price stability and supply continuity.
Tohoku Electric, which relies on Sakhalin for around 10 percent of its LNG, has begun diversifying procurement and considering increased purchases from the United States. Senior executive Takayoshi Enomoto said the company’s strategy aims to mitigate any sudden disruption while weighing the financial cost of alternatives. Tokyo’s broader policy position, however, remains cautious. Prime Minister Sanae Takaichi told U.S. President Donald Trump during their meeting in Tokyo that a total ban on Russian LNG would be difficult to implement given domestic affordability pressures.
Japan’s industry minister echoed that assessment, warning that cutting Sakhalin supplies would push up electricity tariffs just as the government struggles to contain consumer prices that have eroded public support for the ruling Liberal Democratic Party. To buffer against potential shocks, Japan is expanding an emergency LNG procurement scheme, enabling the government to buy and store cargoes for strategic release during crises.
While Japanese utilities continue committing to U.S. gas projects, skepticism remains over the $44 billion Alaska LNG venture—one of Trump’s favored initiatives. Both JERA and Tokyo Gas have signed only preliminary offtake agreements, citing uncertainty over cost structures and project feasibility. Maekawa said JERA was still evaluating Alaska’s economics, while Enomoto acknowledged that its contribution could improve energy diversification but at an unclear procurement cost.
Japan’s balancing act reflects the tension between energy realism and alliance politics. Replacing Russian LNG may be technically feasible, but doing so without inflationary consequences or supply volatility will test Japan’s procurement agility and the credibility of its long-term energy-security framework.
