Japan

ExxonMobil has declared force majeure on its Sakhalin-1 operations in the Russian Far East as risk-averse shippers fearing sanctions refuse to transport Sakhalin crude and production starts to fall.

Drilling is set to take place near the location where the Toyko-based energy company said it encountered a gas reservoir in a 2016 project.

Asian spot prices for LNG took a dive to multiyear lows, feeling the pressure of the lack of demand. Holders of previously agreed upon long-term buyer contracts seek renegotiation.

The decision follows a previous $10-billion investment in LNG the country made in 2017. While that investment focused on outside energy supply sources, this one will be used to develop infrastructure in Southeast Asia and the Indian subcontinent.

The Japanese operator will submit a development plan to the Indonesian government within the next few weeks, with FID for the $20-billion project coming around 2022. Abadi LNG is projected to deliver 9.5 mtpa of LNG.

Japan is bringing its nuclear reactors back on line following the suspension of operations at all reactors after the 2011 Fukushima accident. As the reactors return to full operation, the increase in nuclear generation is likely to displace generation from fossil sources, in particular natural gas.

The world’s first offshore gas-hydrate production was carried out successfully in deepwater Japan at Nankai trough in 2013.