Japan's Russian crude oil imports fell to zero in June, while its coal imports from Russia were also slashed, as the country commits to phasing out Russian oil and coal imports as part of the G7 pledge, according to the latest preliminary data from the Ministry of Finance. LNG imports from Russia, however, remained intact.
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"We see it was a consequence of companies' respective circumstances," Hagiuda added.
Japan's Russian crude imports fell to zero as local refiners are phasing out their import of Russian crudes, with the country's top two refiners, ENEOS and Idemitsu Kosan, having already suspended signing new Russian crude contracts.
The June Russian crude imports slid from 242,575 kiloliters, or 49,218 b/d in May, compared with its import of 514,843 kiloliters, or 107,942 b/d, in June 2021, the MOF data showed, while Japan's import of Russian coal dropped both on a month-on-month and year-on-year basis in June. LNG imports from Russia, on the other hand, jumped in June.
"Considering the risk involved in Russian energy trade following Western sanctions against Russia in the wake of the Ukraine invasion, Japanese companies are reducing imports of Russian oil and coal first in a move to avert reputational risk," Takayuki Nogami, chief economist at Japan Oil, Gas and Metals National Corp., or Jogmec, said.
"While Japan's Russian LNG imports have been steady due mainly to long-term contractual imports, Russian LNG imports would tend to decline with little chance of a significant increase from now," Nogami said.
Speaking to reporters on June 22, Petroleum Association of Japan's President Tsutomu Sugimori said, as per his understanding then, there were no Japanese refiners importing Russian crude oil.
Taiyo Oil has also suspended signing new Russian crude oil import contracts following the government's decision to phase out and ban Russian oil imports, a company spokesperson told S&P Global Commodity Insights on May 10.
Taiyo Oil, which relied on Russia for 20%-30% of its crude procurement, was also working to reduce its term lifting volumes for January-December 2022 via contracts signed prior to Russia's invasion of Ukraine, the spokesperson said.
Phasing out
The moves by Japan's refiners came after the country's Prime Minister Fumio Kishida said on May 9 that Japan will impose an "in principle" ban on Russian oil imports following the latest commitment by leaders of the G7.
On May 8, G7 leaders agreed to phase out Russian energy, including oil, "in a timely and orderly fashion," while ensuring "stable and sustainable global energy supplies and affordable prices for consumers."
Tokyo's move came a month after the government's decision on April 8 to ban Russian coal imports in phases as part of an earlier commitment by G7 nations.
In June, Japan's import of Russian coal plunged 59.5% year on year to 765,000 mt as the country's import of Russian LNG hiked 26.4% on the year to 617,000 mt, according to the MOF data.
The June Russian coal imports dropped from 22.8% from 991,000 mt in May, while the LNG imports from Russia hiked 10.4% from 559,000 mt in May, according to the MOF data.
Japanese utilities and manufacturers are also stepping up efforts to seek alternative supplies to Russian coal following the country's decision to phase out Russian coal imports.
Russia was the second-largest thermal coal supplier and third-largest coking coal supplier to Japan in 2021, with a 12% and 8% contribution to the country's total thermal coal and coking coal imports, respectively, according to the MOF data.
Japan imported 13.879 million mt thermal coal from Russia in 2021, the second-highest after Australia, which sent 81.669 million mt last year, accounting for 73% of total thermal coal imports, according to the MOF data.
Japan's Russian coking coal imports stood at 5.855 million mt, or 8% of total imports, in 2021 after its import of 37.787 million mt from Australia, according to the MOF data.
Russia, Japan's fifth-largest LNG supplier, accounted for 9% of the country's total LNG imports of 74.32 million mt in 2021, according to the MOF data.