• 4 hours British Utility Companies Brace For Major Reforms
  • 8 hours Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 10 hours Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 11 hours Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 12 hours OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 13 hours London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 14 hours Rosneft Signs $400M Deal With Kurdistan
  • 17 hours Kinder Morgan Warns About Trans Mountain Delays
  • 23 hours India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 1 day Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 1 day Russia, Saudis Team Up To Boost Fracking Tech
  • 2 days Conflicting News Spurs Doubt On Aramco IPO
  • 2 days Exxon Starts Production At New Refinery In Texas
  • 2 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 2 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 2 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 2 days China To Take 5% Of Rosneft’s Output In New Deal
  • 3 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 3 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 3 days VW Fails To Secure Critical Commodity For EVs
  • 3 days Enbridge Pipeline Expansion Finally Approved
  • 3 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 3 days OPEC Oil Deal Compliance Falls To 86%
  • 3 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 3 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 4 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 4 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 4 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 4 days Aramco Says No Plans To Shelve IPO
  • 6 days Trump Passes Iran Nuclear Deal Back to Congress
  • 6 days Texas Shutters More Coal-Fired Plants
  • 7 days Oil Trading Firm Expects Unprecedented U.S. Crude Exports
  • 7 days UK’s FCA Met With Aramco Prior To Proposing Listing Rule Change
  • 7 days Chevron Quits Australian Deepwater Oil Exploration
  • 7 days Europe Braces For End Of Iran Nuclear Deal
  • 7 days Renewable Energy Startup Powering Native American Protest Camp
  • 7 days Husky Energy Set To Restart Pipeline
  • 7 days Russia, Morocco Sign String Of Energy And Military Deals
  • 7 days Norway Looks To Cut Some Of Its Generous Tax Breaks For EVs
  • 8 days China Set To Continue Crude Oil Buying Spree, IEA Says
Alt Text

5 Players To Watch In The FinTech Revolution

Artificial Intelligence and Blockchain tech…

Alt Text

This Key Data Points At Strong U.S. Oil Demand

U.S. Gasoline prices haven’t risen…

Alt Text

With A World Awash In Oil, Kazakhstan Faces Fuel Crisis

Kazakhstan is struggling with a…

Scott Belinksi

Scott Belinksi

Scott Belinksi is an international energy consultant currently based in Moscow. His interests and areas of expertise include Eastern European politics, shale gas, deep-water drilling…

More Info

How Separatists In Donetsk Threaten Japan's Energy Security

How Separatists In Donetsk Threaten Japan's Energy Security

Europe is not the only country in the world to feel torn between enforcing sanctions against Russia’s aggressive actions in Eastern Ukraine and preserving its own energy security. Japan, too, has had a difficult time reconciling its strategic interests in the West and maintaining a lucrative relationship with Moscow. Unfortunately, repeated calls for sanctions from its G7 counterparts have complicated Tokyo’s options, pushing the Asian country between a rock and hard place.

Otherwise, how would one explain the outcome of the recent Japan-EU free trade talks that took place in Brussels, where leaders seemed more intent on pressuring Japan to support more sanctions against Russia than in actually discussing the details of what could be one of the world’s largest free trade agreement? Without referring to the already over-used metaphor of ‘geopolitical chess game’, the ramifications of the Ukrainian crisis are baffling, evidenced by how the ripples of such an event can be felt halfway across the world, negatively impacting Japan’s economy.

Untangling the complicated web on international relations can be a daunting challenge even for the most seasoned observer. In Japan’s case, the explanation is fairly straightforward and can be traced back to the Fukushima disaster. In 2011, the global energy market experienced a demand shock after the Asian country decided to phase out its nuclear program altogether and replace it with fossil fuels. To this end, Tokyo became the world’s biggest consumer of liquefied natural gas, the second largest coal importer and the third largest oil purchaser. And whom could it turn to for resources? None other than Russia and its energy empire.

Shinzo Abe, Japan’s reformist-minded prime minister, has made revamping his country’s sagging economic growth his first priority. He has made overtures to Russian President Vladimir Putin, seeking to come to a solution over the status of the Kurils, a group of islands in the country’s north that have been long-disputed. Since some horse-trading is needed to gain the Kremlin’s favors, Japan’s oil imports from Russia have increased by half last year, flowing through Moscow’s Eastern Siberia-Pacific Ocean pipeline, which connects the Siberian city of Taishet to Kozmino Bay Oil Terminal.  Diplomatically, signs of good faith continued to come from Tokyo, as Shinzo Abe was one of the handful of leaders to take part in the Sochi Olympics. A Russian official state visit to Tokyo is also expected this fall, which would be Putin’s second trip to Japan.

Despite the warm hand extended to Putin at the beginning of the year, Shinzo Abe offered him the cold shoulder in the spring after caving to Western pressures to apply visa sanctions to several Russian officials in the wake of the worsening crisis in Ukraine’s east. The Kremlin vowed to retaliate. Given the complex relations between the two countries, Russia has enough leverage against Tokyo to make the situation painful for Abe. Putin is set to meet his Chinese counterpart on May 20 where he is expected to clinch a long-sought, 30-year gas purchase agreement that will send 38 billion cubic meters of gas a year to China starting in 2018. Tokyo would be loath to see a strengthening Sino-Russian partnership, given its long-standing historical problems with the Middle Kingdom. At the same time, Japan cannot afford to alienate its Western allies.

The only way for Tokyo to escape this zero-sum-game logic is for the Ukrainian crisis to reach a conclusion. Once settled, Tokyo would no longer have to take sides and act as an Asian proxy for the West against Russia.

Fortunately, with Ukrainian presidential elections coming up on May 25, Ukraine has the opportunity to find a way out of its rut and indirectly alleviate Japan’s woes. The highly anticipated vote should deliver a new leader, legitimate enough to steer Ukraine out of the muddy waters in which the Crimean crisis and its subsequent aftershocks have plunged it in.

Despite the standard narrative peddled by some pundits, Kiev’s best hope resides not in chocolate king Petro Poroshenko and his shady oligarch connections, but in Yulia Tymoshenko and her ambitious plan to fight corruption. Indeed, if stability is what one seeks from a leader, Poroshenko’s flip-flopping political career and extensive business interests with Russia do not bode well.

The unrest in Eastern Ukraine was allowed to exist in great part by some of the country’s oligarchs and their refusal to side with Kiev, afraid to put at risk their business interests with Russia. The events in Mariupol of May 15, when thousands of steelworkers from one of the companies owned by Rinat Akhmetov, the country’s richest man, stormed the city and cleared the streets of separatists show very well what power oligarchs have at their disposal. This clear example shows the extent to which these businessmen can impact the political process in Ukraine. On the other hand, Tymoshenko, with her promises to enforce anti-monopoly laws and force the oligarchs to retreat from politics, seems like Ukraine’s best choice. Safeguarding the rule of law requires for unchecked power to be reigned in and not allowed to proceed unfettered.

Such is the interdependent nature of international relations nowadays, akin to the butterfly effect and its pell-mell of unintended and unforeseen consequences. Tokyo is sure to keep a close eye on developments in Ukraine, knowing that peace there will allow Japan to pursue its own agenda: Russia, one where Europe plays little part. This will be a lesson for the history books. When the conflict finally simmers down in Ukraine and the world reverts to business-as-usual, we will look back at this moment as the failure of the West to stand united in the face of authoritarianism and Cold War tactics.

By. Scott Belinksi for Oilprice.com

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News