Japan cannot survive without Russian oil, warns the head of the trading house

[beijingwalker]

Japan cannot survive without Russian oil, warns the head of the trading house​

Henry Simpson
Nov. 1 2022

Japan’s near-total dependence on imported energy means it cannot “survive” without continuing to buy oil and gas from Russia, said the head of one of the country’s five major trading houses.

In an interview with the Financial Times, Masahiro Okafuji, CEO of Itochu, whose largest shareholder is Warren Buffett, said that the country’s continued use of Russian energy after the invasion of Ukraine would depend on US and European support for Japan’s position.

“Unlike Europe or the US, Japan depends on foreign countries for almost all of its energy needs, so it’s not possible to cut ties with Russia because of the sanctions,” Okafuji said at the company’s Tokyo headquarters. “In reality, we cannot survive if we stop importing from Russia, even if the volumes are smaller.”

Okafuji, who is among Japan’s most charismatic and aggressive business leaders, also criticized the increasing pressure on companies to prioritize geopolitics over trade. The trend of “friendshoring,” whereby like-minded countries work together in supply chains to reduce geopolitical vulnerability, came with potential risks.

“It’s inevitable, but if such a trend continues, it will reduce companies’ appetite for investment and their ability to innovate and compete, which will have a negative impact on the global economy,” he said.

Japan has kept pace with Western nations in imposing sanctions on Russia, but has not backed out of major energy projects in the country, as it relies on Russia for about 9 percent of its liquefied natural gas and 4 percent of its oil.

The Japanese government and Itochu, along with India’s state-backed ONGC Videsh, remain investors in the Sakhalin-1 oil project, which ExxonMobil has abandoned. The prospects for the oil and gas field project in Russia’s Far East are even more uncertain after Russian President Vladimir Putin signed a decree earlier this month creating a new operating company to be managed by state oil group Rosneft.

Russia has been locked out of Western markets since February’s invasion, but Okafuji said “there are all sorts of possibilities” that Moscow could continue to be an energy supplier, pointing to robust demand from places like China and India.

Including their shareholdings in Russia, the trading houses operate worldwide. They are the backbone of Japan’s economy, traditionally known for their role in securing raw materials for a resource-poor country, but are increasingly keen to shed that image.

Berkshire Hathaway has been a major shareholder in the top five — Mitsubishi, Mitsui, Itochu, Marubeni, and Sumitomo — since 2020, and since then its role has evolved significantly to include project financing and seed investments.

They remain consistently aggressive dealmakers, consistent with their history, with a rapid alternation of acquisitions and divestitures dominating the workloads of investment bankers and lawyers in Tokyo.

However, Okafuji said the falling yen and uncertain global economic outlook have forced Itochu – which owns stakes in the global packaged food businesses of Chinese conglomerate Citic and Dole Food – to tread carefully on investments in China and the US.

“Even under these circumstances, we must act aggressively whenever an opportunity arises. But we have to be very careful about our foreign investments, and China is no exception,” he said.

Some analysts have expressed concern about Itochu’s heavy exposure to China through its 10 percent stake in Citic, but Okafuji emphasized that his risks are lower since his investment is in a state-owned company.

“Currently in China, they are transferring private fortunes from private companies to state-owned companies to narrow the gap between rich and poor,” he said. “Our goal is to help bring prosperous lifestyles to the Chinese people, so I think the Chinese government welcomes this.”

Japan cannot survive without Russian oil, warns the head of the trading house - US Today News

Japan's near-total dependence on imported energy means it cannot "survive" without continuing to buy oil and gas from Russia, said the head of one of the

ustoday.news

 

[Menthol]

Not so surprising!

That is what happened when you always try to make enemies instead of building friendships and cooperation.

Human is a social creature, we depend on others and others depend on us.

The friendship that is built from goodwill, good behavior, and wisdom is the foundation of the world.

You don't need to read the religious text to know about it, it's reality.

 

[beijingwalker]

US orders Japan to shoot itself in the foot, Japan has to shoot, it's not the first time US forced Japan to adopt suicidal policies.

 

[nahtanbob]

There is nothing called Russian oil. Oil is oil in the international market

 

[beijingwalker]

There is nothing called Russian oil. Oil is oil in the international market

So the west is sanctioning Russian oil or just oil?

 

[DF41]

US orders Japan to shoot itself in the foot, Japan has to shoot, it's not the first time US forced Japan to adopt suicidal policies.

US orders Japan to shoot itself in the foot, Japan has to shoot, it's not the first time US forced Japan to adopt suicidal policies.
And NATO and other stupid countries in Europe and Down Under too

 

[nahtanbob]

So the west is sanctioning Russian oil or just oil?

that is a nice question to ask