Japan benefits from its cooperation with Russia

Cooperation is growing between Japan and Russia to develop energy resources. An international consortium including Japanese and Russian investors has started drilling a series of wells in the Sakhalin-1 offshore oil and natural gas field. The consortium is also planning to build an undersea gas pipeline to Japan. Sakhalin-2, another oil and gas field in the region, is already yielding crude oil, and work is under way to begin producing LNG.
Separately, a key decision is expected soon on Russia's huge oil pipeline project that will ship oil from Eastern Siberia, with talks between Japan and Russia on feasibility of the route proposed by Japan nearing the climactic stage. Japan depends upon oil producing countries of the Middle East for nearly 90 % of domestic consumption. It is easy to see that, without mentioning oil crises and the latest war in Iraq, Japanese national interests are not well served by excessive reliance upon oil from the Middle East, a region of serious political instability.

Japan should be actively involved in major projects to develop energy resources in Eastern Siberia and Sakhalin, if only to diversify its suppliers for greater security. There are, however, many obstacles to overcome for profitable joint cooperation.
There are two competing proposals for the route of planned pipelines from eastern Siberia. The route to Nakhodka, on the Pacific coast, as promoted by Japan, is up against one backed by China that would run to the Chinese city of Daqing. Tokyo hopes to convince Moscow to adopt the Pacific route by offering financing and other support.

The shorter route to Daqing would cost less and could be finished sooner than the more costly Pacific route, which experts say will not pay for itself without a substantial increase in oil production in the region. On the other hand, a pipeline to the Pacific Coast would enable Russia to export oil to such big consumers as South Korea and the United States and could encourage expansion of the overall development of EasternSiberia's resources.
President Vladimir Putin's administration is said to be leaning toward the route promoted by Japan. But a decision is probably some time off, since the profit potential for the plan is still unclear, and Moscow needs to lay some diplomatic groundwork to avoid spoiling relations with Beijing.

In addressing energy problems in Asia, Japan is faced with the tough diplomatic challenge of dealing with China, in addition to its relation with Russia. To satisfy the soaring domestic demand for energy, China is trying hard to secure new energy sources all over the world. This results in more instances of clashing interests of China and Japan. But an overheated rivalry with China regarding energy is not in Japan's best interest. Circumstances require Japan to consider the best ways to cooperate with its neighbours in Northeast Asia, including Russia and South Korea as well as China, for such projects as construction of a network of pipelines and increasing oil stockpiles.

Japanese energy policy priorities have always been oil and nuclear energy. The Japanese government remains cautious about being involved in development of Sakhalin, where natural gas is the primary object. Despite geographic proximity, development of resources within Russia has not aroused much enthusiasm in Japan so far largely because of concerns about political and economic stability since the collapse of the Soviet Union.
But natural gas is an environmentally friendly energy resource that yields less carbon dioxide -- a cause of global warming. Europe is trying hard to expand its use of natural gas in keeping with environmental policy. Multilateral cooperation in energy development offers many benefits for the future of the nation's energy policy.