Japanese insurers scramble to retain marine war cover to secure LNG imports from Russia
Japan, the world’s top importer of LNG, is working with marine insurers in the country to ensure LNG imports from Russia are not jeopardized in the wake of the latest sanctions against Moscow.
Three companies from Japan, Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance, and Mitsui Sumitomo Insurance, announced last week that they would stop offering insurance coverage for ship damage caused by the war in Russian waters as of January 1, Reuters reported.
The decision came after reinsurers from Western countries ended their insurance coverage.
As informed by Reuters, the Japanese government asked the insurers to take on additional risks to resume providing insurance for shipowners transporting LNG from Shakalin-2, which is of strategic importance for Japanese energy security. Around 9 percent of Japan’s LNG imports come from Russia.
The likely shippers that could be affected are Japan’s industry majors Mitsui OSK Lines and Nippon Yusen.
The three insurers are reportedly planning to negotiate the resumption of the cover with reinsurers.
Sakhalin II LNG project in Russia lost a major shareholder in March this year when Shell decided to exit its 27.5 percent stake, writing off an investment with a book value of $1.6 billion.
Russian President Vladimir Putin ordered the project to be transferred from its Bermuda-based operator to a domestic company and told foreign shareholders they would have to re-apply to maintain their stake in the new entity.
In August, the Kremlin approved applications from the two Japanese trading houses Mitsui and Mitsubishi Corp. to transfer their stakes to the new operator. Mitsui still holds a 12.5% stake in the project.
In November, Mitsui & Co’s CEO Kenichi Hori said that the project had enough technical expertise to operate even without departed shareholder Shell addressing claims that the new operator of the project did not have the adequate technical expertise to do so.
A new shareholder in Sakhalin II to replace Shell is expected to be named by the end of this year.