Japanese authorities believe Sakhalin-2 stakes will help ensure continuity of gas supply
The Japanese government has called on Mitsubishi and Mitsui to keep their shares in the Sakhalin-2 liquefied natural gas project after it was handed over to a Russian operator, Japanese media The Nikkei reported on Saturday.
“Companies have shares [in Sakhalin-2]so we agreed that they should hold them tight“Japanese Minister of Economy, Trade and Industry Koichi Hagiuda told reporters after meeting Prime Minister Fumio Kishida, as quoted by the outlet.
Sakhalin-2 produces 10 million tons of LNG per year and around 60% of the project’s production is exported to Japan. On June 30, Russian President Vladimir Putin signed a decree under which Sakhalin-2 operator Sakhalin Energy Investment Company, in which Japanese conglomerates Mitsui and Mitsubishi hold 12.5% and 10% respectively, becomes the property of a which will be created by the Russian government.
According to The Nikkei, Tokyo can continue to buy gas without participating in the project under its new operator, as long as existing contracts are in place. However, there is a possibility of disruption of supplies, and Japanese authorities believe that by retaining their stakes in the project, Mitsui and Mitsubishi could ensure the continued flow of Russian LNG to the country. At the same time, the newspaper notes that “there is no guarantee that the new operator will continue to supply LNG reliably to Japan“, even if Mitsubishi and Mitsui remain among the shareholders.
Current shareholders of Sakhalin Energy must agree within a month to receive a stake in a new LLC. If they refuse, the government will value their shares and sell them to a Russian legal entity. In addition to Japanese companies, shareholders of Sakhalin Energy include Shell (about 27.5%) and Gazprom (about 50%). The latter will receive a stake in the new operating company proportional to his current stake. Shell, however, announced in February that it would withdraw from the project.
Mitsubishi and Mitsui said they would make a final decision on their participation in the project when Russia clarifies the terms, including the timing of implementation of Putin’s decree and investment conditions.
Earlier, the Russian President’s press secretary, Dmitry Peskov, said there was no reason to stop LNG deliveries to Japan under Putin’s new decree on Sakhalin-2.
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