Chapter V. The implications of the energy relations between Russia, China and Japan
Picture 15. Nuclear power plants in Japan
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So the reliance of Japan on LNG export is obvious and substantial and is also one of the key determinants of the stable and effective development of the country.
Nuclear sector
Another important type of energy in Japan is nuclear energy. However, it does not occupy the same percentage as oil, coil and natural gas in overall energy consumption of Japan, but the government was relying on the development of nuclear energy and in perspective Japan wanted to make nuclear energy the primary energy recourse of the country. Japan currently has 17 nuclear plants, but immediately after the earthquake happen on March 2011, four of Japan‘s nuclear power stations – Onagawa, Fukushima Daiichi, Fukushima Daini and Tokai – automatically shut down as was intended266.
Picture 15. Nuclear power plants in Japan
266 In mid May 2011, only 17 out of Japan's 50 remaining nuclear power reactors (apart from Monju and written-off Fukushima Daiichi 1-4) were in operation. This represents 15,493 MWe, or 35percent, of the total remaining nuclear generating capacity of 44,396 MWe. Twenty units, with a combined capacity of 17,705 MWe (40percent of total nuclear capacity) were not operating as they had been shut for periodic inspections, while another two units (1700 MWe) had been shut for unplanned inspections or equipment replacement.
More details refer to http://www.world-nuclear.org/info/inf79.html (Retrieved August 1, 2011).
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Source: Kramer Joshua. Japan‘s Evolving Nuclear Disaster And Its Impacts On Nuclear Aspirations In Asia.
March 14, 2011.
http://www.responsibleresearch.com/Responsible_Research___Japan_s_Evolving_Nuclear_Disaster.pdf (Retrieved October 4, 2011).
After the deadly tsunami there were no any concrete statements from the government about the future of the nuclear industry in Japan. Officials used to say that the nuclear policy shall be revised in order to conform to safety regulations.
However, on May 19, 2011 Japanese Premier Minister Naoto Kan claimed that:
―nuclear power will remain a key part of Japan's energy policy but, addressing heightened concerns about its safety, he added it must be carefully regulated267‖. And ―the government's stance is to seek to enhance the safety of nuclear power plants‖ said Premier Minister268.There is no doubt that nuclear energy plays very important role in the country‘s economic and social life, and there is no possibility to reject it all in nearest future: there is no same effective and cheap analogues to the nuclear energy.
In 2010 nuclear energy accounts for almost 30 percent of the country's total electricity production (29 percent in 2009). There are plans to increase this to 41 percent by 2017, and 50 percent by 2030269.
In 2008 Japan generated 1085 billion kWh (kilowatt-hour) gross, 30 percent from coal, 25 percent from gas, 24 percent from nuclear, 11 percent from oil, and 7,5 percent from hydro, though 8 GWe of nuclear capacity was shut down for checks following an earthquake in mid 2007. Per capita consumption is about 7900 kWh per year. Demand for 2009 was expected to be 892 billion kWh, with peak 173,4 GWe, requiring capacity of 194 GWe270.
Nuclear power has been expected to play an even bigger role in Japan's future. In the context of the Ministry of Economy, Trade and Industry (METI) Cool Earth 50 energy innovative technology plan in 2008, the Japan Atomic Energy Agency (JAEA) has modelled a 54 percent reduction in CO2 emissions (from 2000 levels) by 2050 leading on to a 90 percent reduction by 2100. This would lead to nuclear energy contributing about
267 Sigiguchi Toko, Obe Mitsuri, ―Kan Urges Careful Regulation on Nuclear Energy”. Retrieved May 29, 2011 from http://online.wsj.com/article/SB10001424052748703421204576330950183655870.html.
268 The Mainichi Daily News, ―Kan to Review Japan‘s Nuclear Fuel Cycle Policy: Shii‖. Retrieved May 25, 2011 from http://mdn.mainichi.jp/mdnnews/news/20110518p2g00m0dm002000c.html.
269 World Nuclear Association, ―Nuclear Power in Japan". Retrieved August 4, 2011 from http://www.world-nuclear.org/info/inf79.html.
270 Ibid.
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60percent of primary energy in 2100 (compared with 10 percent now), 10 percent from renewables (now 5 percent) and 30 percent fossil fuels (now 85 percent)271.
Japan has a full fuel cycle setup, including enrichment and reprocessing of used fuel for recycling. Japan has promoted nuclear electricity over the years as a means of diversifying its energy sources and reducing carbon emissions, emphasizing safety and reliability. The World Nuclear Association reports there are currently 2 nuclear plants under construction and another 12 in planning stages272.
Table 8. Japanese reactors under construction
Reactor Type Gross capacity Utility Construction start Operation*
Shimane 3 ABWR 1373 MWe Chugoku December 2005 3/2012 Ohma 1 ABWR 1383 MWe EPDC/ J-Power May 2010 11/2014 total (2)
2756 MWe
Source: Nuclear Power in Japan. World Nuclear Association.
http://www.world-nuclear.org/info/inf79.html (Retrieved September 16, 2011).
271 Ibid.
272 Ibid.
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months. Tsuruga 3-4 and Tepco's Higashidori 1 are undergoing final safety assessment by regulatory authorities.Source: Nuclear Power in Japan. World Nuclear Association.
http://www.world-nuclear.org/info/inf79.html (Retrieved September 16, 2011).
Prior to the Sendai earthquake it appeared that Japan‘s nuclear energy program was on the rebound. Japan is the third largest nuclear industry behind the United States and France and was planning the further development of the industry. In late 2010, Tepco appeared newly recommitted to nuclear energy. In September 2010 the company said it planned to invest ¥2.5 trillion (30,5 billion USD) on low- carbon projects domestically by
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2020 to generate more than half of its power free of carbon273. Most of this capacity will be nuclear. Four ABWR plants for Tepco are listed as planned. Tepco‘s shares dropped to an eight-year low after the company announced plans to raise ¥540 billion (US$6,6 billion) via a share sale to fund this planned expansion. The following month, in October 2010, Tepco assumed the lead of the newly formed International Nuclear Energy Development of Japan Co (JINED), a public-private partnership consisting of nine utilities, and Japan‘s leading nuclear equipment suppliers: Toshiba, Hitachi, and MHI. JINED was established to sell nuclear reactor contracts to developing nations and has already signed contracts to supply reactors to Vietnam and Turkey – these would be Japan‘s first foreign reactor sales274. These events will certainly cast doubts over Tepco‘s ability to safely operate nuclear power stations in Japan and about the nuclear energy industry in general among the population. It seems certain that Daiichi has been destroyed. Japan has an aging fleet of nuclear reactors.
As the country recovers, lifecycle extensions will become a major issue.
Uranium supply
Japan has no indigenous uranium. Its 2011 requirements of 8195 tU (tones-uranuim) will be met from Australia (about one third), Canada, Kazakhstan and elsewhere.
Increasingly, Japanese companies are taking equity in overseas uranium projects.
In Kazakhstan, Itochu agreed to purchase 3000 tU from Kazatomprom over ten years in 2006, and in connection with this Japanese finance contributed to developing the West Mynkuduk deposit in Kazakhstan (giving Sumitomo 25 percent, Kansai 10 percent). In 2007 Japanese interests led by Marubeni and Tepco bought 40 percent of the Kharasan mine project in Kazakhstan and will take 2000 tU per year of its production275. A further agreement on uranium supply and Japanese help in upgrading the Ulba fuel fabrication plant was signed in May 2008. In March 2009 three Japanese companies - Kansai, Sumitomo and Nuclear Fuel Industries - signed an agreement with Kazatomprom on uranium processing for Kansai plants.
In Uzbekistan, a Japan-Uzbek intergovernmental agreement in September 2006 was aimed at financing Uzbek uranium development and in October 2007 Itochu
273 Kramer Joshua, ―Japan‘s Evolving Nuclear Disaster and Its Impacts on Nuclear Inspirations in Asia‖, Retrieved June 18, 2011 from
http:// www.responsibleresearch.com/Responsible_Research___Japan_s_Evolving_ Nuclear_Disaster.pdf.
274 Ibid.
275 World Nuclear Association, ―Nuclear Power in Japan". Retrieved August 4, 2011 from http://www.world-nuclear.org/info/inf79.html.
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Corporation agreed with Navoi Mining & Metallurgy Combinat (NMMC) to develop technology to mine and mill the black shales, particularly the Rudnoye deposit, and to take about 300 tU per year from 2007. Then in February 2011 Itochu signed a 10-year "large-scale" uranium purchase agreement with NMMC.
In Australia, Mitsui joined Uranium One's Honeymoon mine project in 2008 as a 49 percent joint venture partner. Then early in 2009, a 20 percent share in Uranium One Inc was taken by three Japanese companies, giving overall 59 percent Japanese equity in Honeymoon. In July 2008 Mitsubishi agreed to buy 30 percent of West Australia's Kintyre project for 495 million USD, with Cameco (70 percent). In February 2009 Mega Uranium sold 35 percent of the Lake Maitland project to the Itochu Corporation (10percent of Japanese share) and Japan Australia Uranium Resources Development Co. Ltd. (JAURD), acting on behalf of Kansai Electric Power Company (50 percent), Kyushu Electric Power Company (25 percent) and Shikoku Electric Power Company (15 percent) for 49 million USD.
In Namibia, Itochu Corporatioon bought a 15 percent stake in Kalahari Minerals, in March 2010, for 92 million USD. Kalahari owns 41percent of Extract Resources, which is developing the Husab project. Then in July 2010 Itochu bought a 10,3 percent direct stake in Extract for 153 million USD, mostly from Polo Resources, giving it 16,43 percent overall in the project276.
Apart from some active interest in uranium exploration and mine investment in Australia and Canada to help secure fuel supplies, for many years the Japanese nuclear industry was focused domestically, but in the 1990s it started to look at export possibilities and international collaboration.Companies such as Hitachi, Mitsubishi and Toshiba formed important alliances internationally or took over major foreign nuclear companies. At the government level, there were agreements with several governments including Kazakhstan. Then NISA set up the International Nuclear Power Safety Working Group in 2008 to cooperate in the field of nuclear safety with emerging countries, primarily in Asia, planning to introduce and expand their use of nuclear power. This led in 2009 to an industry-based group, the JAIF International Cooperation Center (JICC), established with government backing to support countries planning to introduce nuclear power generation, and the International Nuclear Energy Cooperation Council, a forum for the relevant Japanese government authorities and private institutes to collaborate in international aid.
276 World Nuclear Association, ―Nuclear Power in Japan". Retrieved August 4, 2011 from http://www.world-nuclear.org/info/inf79.html.
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Thus, from above mentioned analysis it is obvious that Japan is in sharp need of any kind of primary energy recourses ant its stable and effective supply is one of the main pillar of the national interests of the country.
Because of the scarce domestic natural recourses and thus, extreme dependence on external supplies of energy, Japanese government pays a great attention to the energy strategy of the country , its planning, direction and thoroughful implementation.
Japanese government has been increasingly concerned with the management of energy supply and demand in the volatile energy market. Like many of its counterparts in industrialized economies, Japan largely relies on market mechanisms as the prime instrument of supply and demand management.
Given these problems, the major pillars of the Japanese energy strategy are: (1) the security of supply; (2) reasonable prices; (3) the diversification of energy sources (away from oil to non-oil resources, in particular, the development of alternative and new energy sources, such as nuclear, solar and wind power); (4) geographical diversification of the supply of energy; and (5) energy conservation277. Of these, it is important to note that the first four are concerned on the supply side, while the last focuses on demand.
Energy development in the Russian Far East can be instrumental in helping to diversify energy supplies and thus enhance energy security. It will reduce Japan‘s energy dependency on the Middle East. It will also contribute to Japan‘s efforts of diversifying its sources away from oil to natural gas. The Russian Far East is rich in natural gas that is less polluting and more efficient in power generation. The increased use of natural gas in Japan could contribute to achievement of the environmental pollution targets of the Kyoto Accord. Finally, the prospect for nuclear power development in Japan has become even bleaker with the difficulties in finding new sites and, to maker matters worse, with the terrible nuclear radiation accident at Tokai- Mura in the fall of 1999 and recent collapse of Fukushima-Daiichi. Russian natural gas would be able to contribute in filling the gap between energy demand and the amount of energy supplied by nuclear power.
There also exists the possibility that Russian natural gas would be very competitively price.
277 Ministry of Foreign Affairs of Japan, “Strategy and Approaches of Japan‟s Energy Policy‖. Retrieved June 12? 2011 from http://www.mofa.go.jp/policy/energy/diplomacy.html.
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4.2. Russo-Japanese energy relations
Energy strategies of both countries play a great role in bilateral energy relations which are are the rare phenomenon of contemporary international relations
With the geographical proximity, complementary economic needs and desire to diversify their energy policies, Russia and Japans should be naturally motivated for the intense cooperation.
Russia holds the world's largest natural gas reserves, the second largest coal reserves, and the eighth largest oil reserves. Russia is also the world's largest exporter of natural gas, the second largest oil exporter and the third largest energy consumer278. Japan is the third largest oil consumer in the world behind the United States and China, and the second largest net importer of oil. The country also is the largest importer of liquefied natural gas in the world279.
Despite the unresolved dispute over the four Kurile Islands as a heritage from the WWII period, two countries‘ trade and economic ties have recently been increased dramatically280, but their political relations are still cold281. But, based on successful economic, and specially, energy cooperation it would be possible to elaborate mechanism for future diplomatic negotiations and to resolve political issues. Building relations based on mutual trust would help to improve relations overall.
Even in complicated political and strategic situation of the Cold War era, former Soviet Union and Japan were involved in a few energy projects, mostly in Soviet Far East and Western Siberia. Also Japan purchased diesel fuel for marine engines that was produced at soviet refineries. Besides, Japan imported coal from USSR and also there were plans to develop coal deposits together282.
The first Soviet – Japanese energy project proposals appeared in the early 1970s.
The proposals focused mainly on joint development of Soviet Energy resources in Western
278 ―International energy data and analysis for Russia‖, Retrieved February 22, 2011 from http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=RS.
279 ―International energy data and analysis for Russia‖, Retrieved February 22? 2011 from http://tonto.eia.doe.gov/country/country_energy_data.cfm?fips=RS.
280 In 2008 total Japanese-Russian trade exceeded $ 30 billion (compare with $ 5 billion in 2000); the number of Japanese companies in Russia was 349 in 2008. Kyodo News, May 12, 2009.
281 Japan and Soviet Union re-established their diplomatic relations in 1956, but there still no peace agreement and final border settlement that is the main obstacle for countries‘ political relations.
282 Susumi Yoshida, “Energy Cooperation and Japan-Russia Relations‖, Retrieved March 11, 2011 from http://www.sei.irk.ru/aec/proc2006/4.pdf.
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Siberia (Yakutia Natural Gas and Tyumen Oil Development Projects) and the Soviet Far East (Sakhalin Continental Shelf Oil and Gas Exploration Project). In Table 10 joint energy initiatives in 1970s are provided in details.
Table 10. Japan – USSR Joint Energy Initiatives in the 1970s283
Projects and their description
Yakutia Natural Gas Project
Tyumen Oil Development Project
Sakhalin Continental Shelf Oil and Gas Exploration
Project
283 Vassiliouk Svetlana, ―Energy Politics in Japanese-Soviet Relations in 1970s: Complementarily and Conflict‖, The Russian and Eastern European Studies, Vol. 35, March 2007.
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created in October 1974 especially for this project; currently a memberProject Description 25-year term: joint development of Yakutia gas term was set at 10 years; Japan was expected to provide capital
However, with the exception of the Sakhalin oil and gas project, all projects failed due to a number of the following factors. Political tensions and strategies of the Cold War period were more important then economic benefits considerations. Although Japan was very interested in expanding its energy cooperation with USSR, it has also considered the US stance on its foreign and economic policy towards the Soviet Union. Because of the importance of the military alliance with USA the approval of the US for Japan‘s policy was
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prevailing in country‘s foreign activity. These considerations, exacerbated by the unresolved dispute over Kurile Islands, resulted in the shift of Tokyo‘s policy to the Soviet Union into so-called policy of ―inseparability of politics and economics‖284.
Chinese factor was another one moment playing important role in worsening of Tokyo – Moscow relations in 1970s. China, after political rapprochement with USA in Japan in 1972, was very concerned about strategic advantage of the Soviet Union in Far East. Chinese government believed that future energy cooperation of Japan and Soviet Union, particularly over Eastern Siberia projects would bring lots of economic and technological advantages to USSR, that why China insisted on cessation of such projects.
And finally, the Soviet invasion to Afghanistan in 1979 and following impose of trade embargo from US made future prospective of energy cooperation between Japan and USSR very fragile.
Above-mentioned political factors were prevailing in the failure of energy cooperation between Tokyo and Moscow, but several objective obstacles also played negative role. For example: numerous problems with loan and credit negotiations between countries, the lack of sufficient technology as well as poorly developed infrastructure and difficult climate conditions in Eastern Siberia made the realizations of energy projects very difficult. After the collapse of Soviet Union and the end of the Cold War era, prospective for bilateral energy and economic cooperation was very optimistic. But so far there are only few projects limited to Sakhalin Island and East Siberia (the proposed ESPO pipeline and its related projects).
Sakhalin -1 and Sakhalin – 2 Projects
The Sakhalin Project is developed offshore Sakhalin Island, which is approximately 450 kilometers north of Hokkaido Prefecture in Japan. The project involves eight mining areas, and the multinational consortiums including the Japanese companies make investments in developing each area.
Initially, Sakhalin project was proposed by the Soviet government to Japan in 1972.
Both sides were interested in the project and the joint venture began exploration.
Sakhalin -1 project covers three mining blocks: Odoptu, Chaivo and Arkutun-Dagi, which is 25 kilometers east offshore of the Sakhalin Island. Reserves there estimate as 2,3 billion barrels of oil and 485 billion cubic meters of natural gas285 .
284 Vassiliouk Svetlana, ―Japan- Russia Contemporary Relations: Will the Impasse Ever End?‖ International Affairs Review, Vol. 11, No.1, 2002. p.80.
285 Sakhalin -1 Project Website. Retrieved June 12, 2011 from http://www.sakhalin-1.ru/ru/project/overview.asp.
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