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Interview with Economic Minister Hagiuda: Japan will not withdraw from Sakhalin energy projects

  • April 28, 2022
  • , Sankei , p. 5
  • JMH Translation

Interviewed by Ogawa Mayumi

 

Japan must rely on imports for most of its resources, but the Ukraine situation should not undermine Japan’s energy security. From an energy security standpoint, Japan has expressed its intent to not withdraw from the following projects in which it has interests: “Sakhalin 1,” which produces crude oil in Sakhalin; “Sakhalin 2,” which produces liquefied natural gas (LNG); and “Arctic LNG 2,” the LNG project in the Arctic Circle. Japan has interests in these projects that are stable sources of long-term and inexpensive resources.

 

With many Ukrainian people falling victim to the Russian invasion, I can understand, from an emotional standpoint, the opinion that Russian imports should be suspended immediately and economic pressure should be applied to Russia. Japan has held rights to Sakhalin 1 and 2 for many years. If Japan gives up these interests, another country would immediately take them. Even if another country did not take over the interests, it is likely that Russian crude oil and LNG would be traded at a higher price if they were traded on the market now. Russia will benefit as a result. That is why at this point in time I would like to maintain a stance of openly securing Japanese interests.

 

Japan will decrease its energy dependence on Russia in the future. Even if one country stops trading with Russia, a battle for resources will occur and energy prices will rise if the level of global energy consumption does not change. For instance, we are requesting oil-producing countries to increase crude oil production and the U.S. to increase shale gas production to cover the reduction in imports from Russia. We need to create the best options for each other, considering the circumstances of countries other than Russia.

 

If Russia’s acts of aggression become more severe in the future, the United Nations will have to provide a place to create rules for the global community. There is no point in having the UN if it can’t do that. Countries who have common sense are disappointed by UN’s actions with regard to the invasion of Ukraine. If the UN Security Council can’t make a decision because a permanent member of the Security Council who is a stakeholder in the matter exercises its veto right, the UN is not a democracy. We should revamp the UN. I think the world wants Japan to take the lead in UN reform. Japan will host the Group of Seven (G7) next year. Prime Minister Kishida Fumio should actively seek to reform the UN.

 

The Strategic Energy Plan, which was approved by the Cabinet in October 2021, will serve as a guide for mid- to long-term energy policy. We will respond flexibly to the post-invasion energy situation, but we will not change our overall goal to be “carbon neutral by 2050.”

 

At the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26), Japan proposed the use of ammonia and hydrogen, which do not emit carbon dioxide (CO2) during combustion, as part of the effort to decarbonize coal [power]. European countries said they would like to “work together” with Japan on this issue, indicating that other countries are once again noting Japan’s technological capabilities. This point is the only ray of hope in the disaster of the Ukraine invasion. I would like Japan through the power of its science and technology to be a leader in global energy policy. At this point, we are not considering construction of new nuclear plants or replacement of existing plants. It is my responsibility to restart nuclear power plants with the understanding of the local community after the Nuclear Regulatory Authority confirms that the plants meet the new regulatory standards.

 

Prime Minister Kishida instructed me to “exercise leadership and think about measures” against high crude oil prices. The upper limit of oil subsidies to retailers has been raised from 5 yen to 35 yen per liter. There are criticisms that “subsidies will distort the market (in which the price is determined by supply and demand),” but we are now in a state of emergency due to Ukraine situation amid the recovery from the COVID-19 pandemic. I want to give priority to the people’s livelihoods. [The oil subsidy] is an unusual measure, so it must end someday. We will work with the global community to stabilize crude oil prices.

 

I don’t think we can win the summer Upper House election if we do not make an effort to produce policy outcomes and convey the effects of those outcomes to the people. After all, it is our responsibility to raise salaries. We have strengthened the system of “subcontractor inspectors.” Inspectors now understand the actual conditions and listen to the views of small and mid-sized companies nationwide so that prices are passed on to subcontractors in an appropriate way. It might seem strange for the government to intervene in private sector management, but wages will not increase unless someone takes action. I will do so even if people resent me for it.

 

“[Am I a] post-Kishida [candidate]?” I don’t mean to be pretentious, but ever since I was first elected to the Diet I have not harbored the ambition to become the president of the Liberal Democratic Party (LDP) or prime minister. I would like to cap my career by becoming the LDP Secretary General.

 

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