Russian-Japanese economic relations

MOSCOW, May 5. /TASS/. Shinzo Abe, Prime Minister of Japan, arrives in Moscow with a working visit on May 6, 2016. Japan is one of Russia's most important trading partners in the Asia-Pacific region. Trade turnover and investment According to the Russian Federal Customs Service, in 2015 bilateral trade turnover amounted to $21.3 bln, which is 30.7% less than in last year ($30.8 bln). Russian exports exceeded imports by $7.7 bln. Russia occupies 15th place among the foreign trade partners of Japan (share in the Japanese trade - 1.6%). Japan - 7th place among Russia's partners (share in turnover - 4.1%). More than 80% in the structure of Russian exports to Japan accounts for supplies of mineral fuels. Other export commodities include aluminum and its products, wood and charcoal, precious stones, precious and ferrous metals, rubber. Russia imports from Japan vehicles and spare parts (more than 50% of imports), reactors, boilers, machinery and mechanical appliances (19%), electrical machinery and equipment, cameras, plastic, ferrous metals. Compared to 2014, imports of each of these categories has decreased on average by 20-30%, but import of pharmaceutical products and of vessels increased by 28% and 119%, respectively. Japan’s foreign direct investment to Russia started to grow in 2004. In 2012, the volume of accumulated investments from Japan amounted to $2.7 trillion, but fell to $1.7 trillion in 2014. Main areas of Japanese investment in Russia include fuel and energy complex, mining, production of motor vehicles and parts, agriculture. Currently there are about 270 companies with the participation of Japanese capital in Russia. Fuel and energy complex Fuel and energy complex is a strategic area of ​​the Russian-Japanese economic cooperation. The parties focus is on the implementation of the Sakhalin oil and gas projects, which involved a number of Japanese companies. The share of the Japanese side in the project Sakhalin-1 is 30%, in the project Sakhalin-2 - 22.5%. Under the Sakhalin-2 project first in Russia and one of the world's largest liquefied natural gas (LNG) plant started working in 2009. This was the first year of LNG deliveries to Japan. In 2014, the share of Russian gas reached 9.5% in the Japanese market (11.5 billion cubic meters). Completion of the main oil pipeline "Eastern Siberia - Pacific Ocean" in 2012 helped to increase access of Russian oil to the Japanese market. In 2014, oil imports to Japan from Russia amounted to 13.5 million tonnes, which accounted for 8.2% of total oil consumption in the country. The Russian side offers Japanese cooperation in the development of hydrocarbon fields in Sakhalin, East Siberia and the Far East. In November 2015, Head of Rosneft Igor Sechin said that the Japanese partners proposed mining projects with a total volume of 6 billion barrels of reserves and resource base of 100 billion barrels of oil equivalent. In February 2016, the largest independent gas producer in Russia Novatek said it was ready to invite Japanese partners to the "Arctic LNG" project, aimed at the export of liquefied natural gas. In the course of East Economic Forum, as held in September 2015 in Vladivostok, RAO Energy Systems of the East and Kawasaki holding signed agreements on introducing new generation technologies in the Far East (the projects of construction of small gas turbines), Rosneft and the Japanese drilling company - on a joint drilling of exploration wells in Vietnamese shelf. Mechanical engineering Large-scale assembly capacity of Japanese automakers was built in Russia. Toyota, Nissan, Mitsubishi (with Peugeot-Citroen), Yokohama Rubber (for the production of tires) opened their factories in Russia. Japanese companies Isuzu and Mazda have created joint ventures with Russian companies In 2010, a plant for the production of excavators and forklifts of Japanese corporation Komatsu was opened in the Yaroslavl region. The total investment in this project amounted to $63 mln. In 2012, Marubeni corporation signed an agreement with Mechel group of companies on the supply of large-size tires. In June 2014, plant for the production of hydraulic excavators Hitachi Construction Machinery was opened in the Tver region. The total investment amounted to more than 2.2 bln rubles ($33.49 mln). Information and communication technologies Commercial operation of a submarine cable system Sakhalin-Hokkaido started in 2008. This project was implemented by Japanese Telecommunications Corporation NTT and Russian Transtelekom. Reinforced cable with a length of 570 km connected Nevelsk on Sakhalin Island and the city of Ishikari, Hokkaido. The bandwidth - 640 Mb per second. The volume of two-way investment amounted to more than $50 mln. Chemicals and pharmaceuticals In 2010, Russian company Ammoni, Mitsubishi Heavy Industries Ltd. (MHI), Sojitz Corp. of Japan and China National Chemical Engineering Corp. (CNCEC) signed agreement on construction of a large-scale urea fertilizer plant capable of producing ammonia and methanol concurrently. The project’s total cost amounted to $2.2 bln, including $1.9 from Vnesheconombank using borrowed funds provided by the Japanese financial institutions with the participation of export credit agencies of Japan. The complex was opened in February 2016 In September 2012 the Japanese pharmaceutical giant Takeda completed construction of its first venture in Russia, in Yaroslavl. Investment exceeded $100 mln. In 2013, the plant began to produce pharmaceutical drugs. Metallurgy A joint venture of the Japanese concern Mitsui and Russian Severstal - service center for the production and sale of rolled metal products operates in Vsevolozhsk, St. Petersburg region, since 2013. In 2014, the center has sold 20,000 tonnes of production. Earlier, Rosneft and Gazprom discuss joint projects for extraction and processing of hydrocarbons with Japanese companies, Russian President’s aide Yuri Ushakov told journalists. "Cooperation in the field of renewable and alternative energy sources is developing, there are good prospects in peaceful nuclear energy," Ushakov said. Largest Japanese banks, particularly The Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Bank, may participate in Arctic LNG 2 project funding. "Novatek is building the Yamal LNG natural gas liquefaction plant with participation of JGC and Tieda. Arctic LNG 2 project will be the next one and major Japanese banks - The Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Bank - are considering an opportunity of participation in its construction financing," Ushakov said. In general, according to Ushakov, fuel and energy complex is a strategic area of ​​cooperation between the two countries. Thus, in 2015, 6.5 mln tonnes of liquefied natural gas was exported from Russia to Japan, 14.5 mln tonnes of oil, 1.7 mln tonnes of oil products and 16.2 mln tonnes of coal. In addition, there are Sakhalin-1 and Sakhalin-2 projects with the share of Japanese companies of 30% and 22.5%, respectively. Read more