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2023 January 24 09:48

Japanese insurance companies to raise premiums for LNG vessels operating in Russian territorial waters by 80%

Japan receives 9% of its imported LNG from Sakhalin-2

Japanese non-life insurance companies will raise premiums for liquefied natural gas vessels operating in Russian territorial waters by about 80% starting Wednesday, Nikkei reports. According to the statement, the move is in response to overseas reinsurers, which shoulder part of the insurance benefit payments, increasing their reinsurance premiums amid heightened geopolitical risks due to the situation in Ukraine.

Shipping companies are likely to pass on higher transportation costs, which will put upward pressure on natural gas prices.

In December, Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance told shipowners in December that from Jan. 1 they would stop offering insurance coverage  anywhere in Russian water, not only in the Black Sea and the Sea of Azov but even in the Far East along the entire Northern Sea Route.

Experts think this decision can affect LNG imports from the Sakhalin-2 as Japan receives 9% of its imported LNG from the complex in Russia's Far East.