Japan analyzes Russia’s move to replace Sakhalin-2 energy project operator

Tokyo, Jul 1 (EFE).- The Japanese government on Friday expressed dissatisfaction with Russia’s threat to expropriate the Sakhalin-2 energy project, where most of its Russian imports of liquefied natural gas (LNG) come from, and said that it is analyzing it thoroughly.

“Our interests in our country’s resources must not be undermined,” Japan’s Deputy Chief Cabinet Secretary Seiji Kihara said on Friday about the decree signed Thursday by Russia’s president Vladimir Putin to set up a new operator for the Sakhalin Energy consortium.

Sakhalin Energy, which manages the oil and gas project, is made up of the Russian company Gazprom (50 percent), British company Shell (27.5 percent), and the Japanese companies Mitsui (12.5 percent) and Mitsubishi (10 percent). Gazprom will keep its stake.

Shell has said it will exit the project as a result of the war started by Russia in Ukraine and the sanctions imposed on Moscow, but Japan has reiterated its intention to remain in the consortium for energy security, given its high dependence on imports.

Under the Russian decree, “all the property of the project will be transferred to the ownership of the Russian Federation,” which will appoint a national limited liability company as the new operator, Russian newspaper Kommersant reported.

Under the restructuring, foreign shareholders must ask the Russian government for a stake in the new firm within a month. Moscow will then decide if they will be allowed to keep their stake.

If they refuse the new conditions or are not permitted to keep their stake, Moscow will sell their shares within four months and “the money from the sale will be frozen in the Russian Federation in type ‘C’ accounts.”

Kihara did not comment further as the government is studying the decree and the rights and interests of Japanese companies in Sakhalin-2 and the influence on LNG imports.

Japanese imports of LNG from Russia accounted for 8.8 percent of its total in 2021, the vast majority (around 8 percent) coming from the Sakhalin-2 project, according to data from the Ministry of Economy, Trade and Industry. EFE

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