Major Japanese non-life insurers appear likely to extend their war-risk policies for ships in waters around Russia and Ukraine. The insurers previously said they would cancel their coverage due to the difficulty of securing reinsurance.

Sources say the U-turn follows a request from the Japanese government.

Tokio Marine & Nichido Fire Insurance, Sompo Japan Insurance and Mitsui Sumitomo Insurance had earlier announced they would stop covering Russia-related shipping risks because reinsurance companies were refusing to back them. The insurers said they would cease their coverage from January 1.

But sources say the Agency for Natural Resources and Energy and the Financial Services Agency urged the firms to review their decision, as it could possibly impact Japan's imports of liquefied natural gas from the Sakhalin-2 oil and gas project in Russia's Far East.

The insurers reportedly secured reinsurance through industry negotiations. They now appear able to extend their policies until March next year.

But they say their reinsurance coverage will be reduced and it is unclear whether the reinsurance companies will be able to continue their policies from April.

Observers say the situation raises doubts whether Japan will be able to procure stable supplies of liquefied natural gas from Sakhalin-2 in the future.