Japan’s Mitsui O.S.K Lines is facing more challenges from volatile geopolitics for its LNG shipping business and decarbonization strategies, the shipping group’s president and CEO, Takeshi Hashimoto, said in a recent interview with Platts, part of S&P Global Commodity Insights.
Geopolitical hurdles for LNG shipping
The EU sanctioned three of MOL’s LNG tankers for supporting Russia’s energy trade in May, but the ships were delisted in July when Brussels said they received “firm commitments” that they would not be deployed to transport cargoes from the Yamal and Arctic LNG 2 projects.
Western authorities have yet to sanction Yamal, commissioned before Russia’s invasion of Ukraine, over concerns of supply disruptions. In contrast, Arctic LNG 2 is a new project sanctioned by the US and UK, and it faces trade restrictions enacted by the EU.
“Our vessels were suddenly designated as subject to sanctions, despite the fact that the vessels were carrying Yamal cargo that is not sanctioned by the EU,” Hashimoto told Platts.
“Other shipping companies transporting the same Yamal cargo have not been sanctioned. This is what we thought [was] unfair … Imposing sanctions without respecting established rules may create obstacles for international shipping and global trade,” he added.
Hashimoto added the EU may believe that transporting Yamal cargo to Europe is acceptable because there is demand, but “Asia also currently has demand and needs LNG from Russia.”
MOL operates more than 100 LNG tankers, of which seven are deployed to transport Yamal LNG, including three icebreaking ships designed to operate in the Arctic region, where the project is located. It also has one tanker shipping from Russia’s Sakhalin 2 project in the Pacific.
However, fetching any further shipping deals with Russian LNG projects would be “out of the question,” before the Russia-Ukraine war comes to a settlement, offering more clarity on sanction rules, according to Hashimoto.
Russia has exported 26.1 million metric tons of LNG so far this year, of which 12 million mt to EU countries, 6.3 million mt to China, 4.9 million mt to Japan, and the rest to other Asian countries.
The EU plans to halt Russian LNG imports from the beginning of 2027, potentially leaving Japan as the sole G7 member buying the energy product from Russia in the years to come.
If Japan were to stop purchases of Russian LNG and align itself with the West, MOL could explore opportunities in shipping to China without violating any sanctions, Hashimoto said.
“It’s more and more difficult, basically … We definitely do not want to be a part of the shadow fleet,” established to transport sanctioned energy, Hashimoto added.
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Source: Platts
