Japan seeks peace treaty with Russia despite territorial dispute

The Japanese Foreign Ministry, in its annual Blue Book report outlining key diplomatic trends, has declared its intention to continue negotiations with Russia to sign a peace treaty and resolve the issue of the “northern territories” (Tokyo’s term for the Southern Kurils), despite the challenging relationship.

These islands include Kunashir, Shikotan, Iturup, and the Habomai archipelago.

The ministry once again described these territories as “illegally occupied” and stated that the Kuril Islands issue is the greatest concern in Japan-Russia relations.

Japan and the Soviet Union, of which the Russian Federation is the successor, have not signed a peace treaty following World War II due to the territorial dispute over the Southern Kurils.

In 2022, Russia refused to continue negotiations on this matter after Japan imposed sanctions following the start of the military intervention in Ukraine.

Moscow also withdrew from dialogue on developing joint economic activities in the Southern Kurils.

The report also emphasized that the Japanese government is pursuing a policy of gradually reducing its dependence on Russian energy resources, including oil and coal, while acting to minimize the negative impact on public life and business.

At the same time, the report stated that Japan intends to maintain its participation in the Sakhalin-1 and Sakhalin-2 projects.

The document stated, “The Sakhalin-1 and Sakhalin-2 oil and gas development projects are important for Japan’s energy security in terms of ensuring a stable supply in the medium and long term, and we intend to maintain our participation in them.”

In the previous version of the Blue Book, the Japanese Foreign Ministry also declared its intention to maintain its participation in the Sakhalin-1 and Sakhalin-2 projects.

In the Sakhalin-1 project, where Sokol-grade oil is produced, the Japanese consortium Sodeco (whose main shareholder is the Japanese government, and its members are private companies such as Japex, Itochu, Marubeni, Inpex) has a 30% stake.

The American company ExxonMobil also had the same stake but announced its withdrawal from the project in 2022.

The new managing operator of Sakhalin-1 became Sakhalinmorneftegaz-Shelf, a subsidiary of Rosneft (which previously had an 11.5% stake).

All assets of the consortium running the Sakhalin-1 project were transferred to Russian ownership.

Additionally, ONGC Videsh Ltd (India’s state oil company) has a 20% stake in Sakhalin-1, and RN-Astra (a subsidiary of Rosneft) has an 8.5% stake.

Although Japan does not import fuel under the project, Tokyo considers Sakhalin-1 important for ensuring supply diversity and stability.

The then-Japanese Minister of Economy, Trade and Industry, Yasutoshi Nishimura, touched on this issue in a statement in the fall of 2022.

Nishimura noted that Japan is 95% dependent on the Middle East for its oil supply.

Japan is one of the world’s largest importers of liquefied natural gas (LNG), sourcing approximately 9% of its total LNG volume purchased from Sakhalin-2.

Japanese companies Mitsui and Mitsubishi hold 12.5% and 10% stakes in Sakhalin-2, respectively, and confirmed their participation in the project in the fall of 2022.