Press Conference by Minister Hagiuda (Excerpt)

*Note: This is a provisional translation for reference purposes only.

9:15-9:30 a.m.
Friday, April 1, 2022
Press Conference Room, METI

Opening Remarks 

GX League

Good morning. I would like to say two things to start.
First, our call for companies to endorse the GX League Basic Concept, announced on February 1st of this year, ended yesterday. 440 companies from a wide range of industries agreed to endorse it in the end, including those from industries that emit large amounts of CO ₂.
We used the published figures from each endorsing company to calculate that their total CO₂ emissions come to approximately 320 million tons, accounting for about 28% of Japan's total emissions and about 38% in the industrial business' energy conversion sector.
A new website will be launched this afternoon with a list of the endorsing companies.
METI will designate this fiscal year as a preparatory period and continue communicating concretely with those endorsing companies. In FY2023, we hope to start on a framework for investments toward reducing emissions and voluntary emissions trading.
The administrative staff in charge will explain details in a briefing later, so feel free to ask questions.

Startups

Secondly, we announced guidelines for investing in startups, created with the Japan Fair Trade Commission, yesterday.
As more people are investing in startups, the Japan Fair Trade Commission's research has revealed some cases where startups are treated in a manner that they feel is unacceptable, such as individual founders being required to accept terms that are substantially identical to personal guarantees, or startups being unreasonably urged to disclose trade secrets to investing companies.
To cope with such cases, these guidelines will rectify improper contract practices by displaying the Japan Fair Trade Commission's view of possible abuses of dominant positions under the Antimonopoly Act, and METI's problem-solving course of action.
Moving forward, we will work on raising public awareness of and popularizing these guidelines and follow-up on whether just transactions are prevailing according to the said course of action. Through these efforts, we will further develop the business environment needed for Japan's startups to grow significantly.
That is all.

Question-and-Answer Session

Sakhalin-1, Sakhalin-2, Arctic LNG 2

Q: I would like to ask about the Sakhalin projects.
Prime Minister Kishida announced at yesterday's meeting that Japan does not plan to withdraw from Sakhalin-2. I would like to ask you, as a minister overseeing this field, about the significance of Sakhalin-1 and -2.
You also recently stated in the committee that Japan was not presently considering suspending the Arctic LNG 2 project in the Arctic Ocean, but I wanted to confirm whether you meant keeping the status quo or advancing the project with new investments.

A: For Japan, which relies on the Middle East for about 90% of its crude oil imports, Sakhalin-1 is a valuable source of crude oil supply outside the Middle East. Sakhalin-2 provides about 9% of the LNG we import—which is equivalent to about 3% of the electric power we generate—making it an essential energy project for our power and gas supply and demand.
We have interests in both projects and have secured the right to offtake on a long-term basis. They are extremely important for our energy security in times with soaring energy prices, like the present, as we can procure the output from the projects for less than the market prices. Thus, we do not plan to withdraw from them.
I did also state in the Committee on Economy, Trade and Industry that we were not presently considering suspending the Arctic LNG 2 in the Arctic Ocean as you said. I meant that we would not withdraw from it.
I understand that the EU's regulations were revised last month to include banning European corporations from making new investment in the Russian energy sector. We will respond appropriately to this revision after thoroughly analyzing the impact it has on the Arctic LNG 2.

Oil Policy

Q: I'd like to ask about two things related to resources.
First, America's Biden Administration announced that it would additionally release the largest amount ever from its petroleum reserves in order to curb gasoline prices, following the Russian military invasion of Ukraine. They will reportedly have discussions with each country at the IEA meeting, but please give us your opinions on what action Japan may take in response to this.

A: At yesterday's OPEC+ Ministerial Meeting, they decided to maintain the current pace of production increase but revised the production quotas. As a result, I understand that they will increase production by 432,000 barrels per day this coming May.
I am also aware of the reports about President Biden’s announcement.  Although we have been working closely with the US and the IEA regularly, I am not certain whether his statement refers to action taken by America alone or he plans to make such a proposal at a future IEA meeting. In any case, I will look into the matter, and take appropriate action with international developments taken into consideration.

The Situation in Ukraine

Q: My other question is related to the ruble. Russia's President Putin signed a presidential order requiring nations and regions deemed "unfriendly" to pay for their natural gas in rubles, starting from the 1st. Please tell us your thoughts on this.
 
A: I am aware of this via reports as well. However, this seems to be a statement on more detailed content. I hear that it defines types of gas, the method of sales, and the size of companies involved and the size of Russian equities. I do not think this will have an immediate effect on Japan, but I will keep a close eye on this matter as well.

Oil Policy 

Q: About the OPEC+ meeting, as you mentioned earlier, they plan to leave the current pace of production increase as it is, which indicates that they will continue ahead with a significant production increase. Please tell us your thoughts on this.

A: Yesterday, I talked with Kuwait's minister online about this and other issues. I believe OPEC+ is looking closely at the global oil situation such as demand trends.
While we continue to call for production increases along with price stability, I believe that replacing oil producing countries and other actions have led to production increase to a certain extent. While continuing to firmly convey consumer countries' desire to them, I hope we can continue negotiations based on the mutual trust.

Q: You just mentioned that you spoke with Kuwait's Minister of Oil yesterday, and from that conversation it seems that Japan will support Kuwait financially with investments that aim to increase production. I believe the goal of this is to stabilize crude oil prices, but on the other hand, supporting these new investments in oil or crude oil seems to go against the current move toward carbon neutrality. What are your thoughts on that?

A: I think listening closely to such criticisms was necessary before Russia invaded Ukraine, but the international energy situation is changing significantly.
I recently attended the IEA meeting in Paris and visited the EU. Of course, every country—including all of Europe—wants to work hard toward the end goal of carbon neutrality by 2050 without anyone slacking off. However, thinking about the lives of our citizens and the economy, I think using sources like coal and oil wisely while finding alternative energy sources may be necessary for now both in Japan and the rest of the world.
Certainly, some may criticize investments in those sources as we may continue using them. However, Japan was recently in a situation where we could have experienced a blackout. So, I hope you can understand that our priority will be citizens' livelihoods and industries. We will start with what we can do around us.
Also, asked if these investments in coal and fossil fuels will contribute to large emissions forever, I would remind you of what I always say: that Japan is announcing both at home and abroad that we will make efforts to reduce CO₂ through technologies like co-firing ammonia, hydrogen, and CCUS. At last year's COP26, some foreign media remarked that Japan's prime minister was saying things that sounded like dreams. At this year's international conferences, however, several countries have requested inspection of Japan's CCUS technology or proposed to jointly purchase ammonia for lowering costs.
I have felt that other countries expect a lot from Japan's technological capabilities. As a science- and technology-oriented country that once succeeded in seaborne trade of LNG contained in tanks, Japan is being tested on how to lead the world with the technology we have during this crisis, the scale of which we have not seen in 60 years. So, we want to show leadership by firmly sharing Japan's technology with the world and demonstrating how we can use fossil fuels wisely while working to reduce CO₂ emissions, refuting the idea that fossil fuels mean emissions.