Russia's redistribution of ownership of the Sakhalin-2 gas project could further narrow global markets, pushing Japan to compete with Europe for alternative sources of supplies, writes Bloomberg.

The decree of President Vladimir Putin on the transfer of rights to the plant to a new Russian company does not have a direct impact on the project's largest customer, said Japanese Prime Minister Fumio Kishida. Kremlin spokesman Dmitry Peskov also said there is currently no threat to LNG supplies from the plant. Japanese trading houses Mitsubishi Corp. and Mitsui & Co. own a total of 22.5% of the shares of the project.

Despite this, the world's second-largest LNG buyer is considering replacing Russian supplies by increasing purchases on the spot market or elsewhere, Trade Minister Koichi Hagiuda said. Japan has already asked US and Australian government officials to increase supplies to reduce dependence on Russia, he said.

This echoes the European Union's efforts to cut Russian supplies, including agreeing to additional purchases from the US this year. Russia sharply cut pipeline imports to Europe last month, sparking new price shocks ahead of peak winter demand.

If the Sakhalin project, which supplied gas to Japan at competitive prices, is in such a state of uncertainty, spot prices are at risk of rising even more, which may even cause a panic in the market, said Hiroshi Hashimoto, an analyst at the Institute of Energy Economics in Japan.

Since the beginning of the year, gas prices in Europe have more than doubled, and in Asia - by about a third.

According to BloombergNEF forecasts, the global LNG market will remain tight until 2026. Additional deliveries from new factories in Qatar and the US will take several years, which could lead to constant competition and shortages in those countries that cannot pay higher prices.