Japanese insurance firms to continue providing war risk cover for shippers

Japan has urged insurers to continue to providing marine war insurance for LNG shippers in Russian waters.

JAPANESE insurance firms will continue provide war coverage for shippers in Russian waters, allowing uninterrupted import of liquified natural gas into Japan allmarinenews report.

Insurance firms will continue providing the war insurance based on their own risk tolerance level, a spokesperson with the Japan’s Financial Services Agency said.

“The Sakhalin-2 LNG will continue to arrive in Japan,” the spokesperson told Lloyd’s List in an email.

The FSA, which is the regulator for banking, securities and exchange, and insurance sectors in Japan, joined the Agency for Natural Resources and Energy, a government agency under the Ministry of Economy, Trade, and Industry, in calling on the General Insurance Association of Japan last month to hold talks with reinsurers to raise the maximum amount of insurance coverage to allow LNG imports into Japan to continue, the spokesperson said. 

The move came after Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance told shipowners that they would stop offering marine war insurance from the end of 2022, which covers damage to ships from war in Russian waters.

The three insurance firms have been approached for comment.

Located in the Russian Far East, proximate to Japan, the Sakhalin project significantly contributes to Japan’s energy security. Approximately 60% of LNG produced is supplied to Japan. Imports from the integrated oil and gas project make up 9% of the country’s liquefied natural gas imports.

Japanese firms Mitsui and Mitsubishi Corp own 12.5% and 10% stakes respectively, in Sakhalin-2 project. The other owners are Russian energy company Gazprom (50% + one share), and Shell (27.5% - one share).

Mitsui OSK Lines has said it will continue shipping liquefied natural gas from Russia in line with the Japanese government direction.

“Some companies decided to withdraw from Russia-related business, but our group will continue to offer stable transport services, placing the highest priority on securing the safety of crew members, cargo and vessels,” chief executive Takeshi Hashimoto said in his New Year address.

The decision is also taken considering strategic importance of energy supply under current circumstances, he said.