After a senior manager at gas producer Gazprom floated a proposal to expand the payment scheme, major Asian consumers of Russian liquefied natural gas (LNG) claimed they had not yet received requests to pay for supplies in Russian roubles.
Following Russia’s attempt to shut down the Sakhalin-2 LNG plant in retaliation for Western sanctions, top consumers like Japan and South Korea began to worry about a supply shortage.
As its economy faces the worst crisis since the fall of the Soviet Union in 1991 and is cut off from the global financial system, Russia has already demanded rouble payments from European oil and gas buyers.
Receiving payments in roubles for energy exports aids Moscow in getting around sanctions and funding its conflict in Ukraine, which it refers to as a “special military operation.”
The Russian gas producer has proposed expanding its rouble-for-gas program to cover liquefied natural gas (LNG), according to Kirill Polous, a deputy department head at Gazprom, the Interfax news agency reported on Monday.
However, the companies have not yet received a request to pay for LNG supplies in rubles, according to spokespeople for South Korea’s state-run Korea Gas Corp (KOGAS), Japan’s largest LNG importer JERA, and Japanese utility Kyushu Electric.
A spokesperson for Kyushu Electric stated that if the payment currency changed, the company’s LNG contract would need to be updated.
When asked if the city gas supplier has received a request for rouble payment, another Japanese buyer, Tokyo Gas, cited a confidentiality clause in its Sakhalin-2 LNG agreement and declined to comment.
Osaka Gas, a third buyer, is gathering data, a spokesperson said.
The firms have long-term agreements with Sakhalin Energy Investment Company, in which Gazprom, Shell, Mitsui, and Mitsubishi Corp. each own a 50 percent stake.
With 40 billion cubic meters of supercooled gas produced annually, primarily by Sakhalin-2 and Novatek’s Yamal LNG, Russia provides about 8% of the world’s LNG supply.
Japanese utilities, which are consuming 60 percent of the output from the Sakhalin-2 facility, are the facility’s top customers for LNG, followed by the government-run Korea Gas Corp (KOGAS) of South Korea and the CPC of Taiwan.
According to the KOGAS spokesperson, 6 percent of South Korea’s LNG imports come from Russian sources.
According to Taiwan’s Economy Ministry, a five-year contract for CPC, a state-owned refiner, to directly import LNG from Russia has expired.
There are no issues with rouble purchase or settlement because the company has already identified alternatives, the ministry added. According to Refinitiv data, CPC most recently imported two Yamal and Sakhalin cargoes that were discharged in June.
China’s CNPC, Gazprom Marketing & Trading, Naturgy, Novatek, and TotalEnergies are a few of the major long-term LNG purchasers from the Yamal facility.
According to Tilak Doshi, managing director of Doshi Consulting, the proposal shouldn’t be taken as a surprise because it would force Gazprom to charge any payments for gas, whether it is piped or in the form of LNG, in roubles at its discretion.
He continued, “It appears that the Russian ‘gas for roubles’ scheme was primarily directed at the European Union and the United States for their unilateral expropriation of Russian foreign exchange reserves, and not at Asian LNG customers, such as South Korea and Japan, who are significant consumers of Russia’s LNG.
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