(Bloomberg) — Japan’s buyers of Russian liquefied natural gas are assessing how imminent changes to shipping insurance — triggered by the ongoing war in Ukraine — will affect supplies from the key Sakhalin-2 project in Russia’s Far East.
Three Japanese insurance companies — Tokio Marine Holdings Inc., Sompo Holdings Inc. and MS&AD Insurance Group Holdings Inc. — will stop providing cover for marine hull war risks in Russian, Ukrainian and Belarusian territorial waters from Jan. 1, spokespeople for the companies confirmed to Bloomberg. The plans were reported by Japan’s Nikkei newspaper on Dec. 24.
Any further disruption in shipments of the fuel will add to difficulties for resource-scant Japan, which relies heavily on imports, particularly from Sakhalin. Tokyo has repeatedly stressed the importance of Sakhalin-2 for maintaining the nation’s energy security, especially as demand for heating fuel rises during the winter months.
Japan’s top power producer Jera Co. is assessing the impact to its LNG procurement, company spokesperson Hirotaka Iwase said. Regional utility provider Kyushu Electric Power Co. is receiving information from shipowners and will continue to watch the situation closely, a spokesperson for the firm said. Tokyo Gas Co. and Tohoku Electric Power Co. are also looking into potential impacts, spokespeople at the companies said.
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The measure is expected to affect vessels sailing routes including via the Black Sea and the Sea of Azov, as well as those off eastern Russia. It comes as international re-insurers withdraw from underwriting Russia-related risks, according to the Nikkei report.
Tokio Marine & Nichido Fire Insurance Co., a unit of Tokio Marine and one of the insurers, has started negotiations with re-insurers to resume underwriting and has received positive feedback from some of them, spokesperson Itsuki Yoshihara said.
—With assistance from Grace Huang.