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The Japanese industry ministry has asked Mitsui and Mitsubishi to "think positively" about their participation in the Russian Sakhalin-2 oil and gas project after the Russian government announced it would boost state ownership.
Reuters reports that industry minister Koichi Hagiuda today asked the two companies, which are minority shareholders in Sakhalin-2, to consider staying on, saying he was due to discuss the matter with a Mitsubishi executive in the coming days.
"The public and private sectors will work together to protect the interests of Japanese companies and ensure a stable supply of LNG," Hagiuda said.
A day earlier, Hagiuda told media that "The Sakhalin-2 project is extremely important for stable energy supply to Japan, and we will basically continue to maintain the stakes."
Japan is one of the biggest LNG importers in the world and gets about a tenth of the LNG it consumes from Russia.
Earlier this year, the Japanese industry minister said that the Sakhalin-1 and Sakhalin-2 projects "are essentially important for energy security because the projects allow Japan to procure supplies below the market price, especially amid current high energy prices."
In early July, Moscow said it would set up a new state-owned company to take over the assets and debt of the Sakhalin-2 consortium, with Gazprom to get a little over 50 percent of the new entity.
Shell, the third foreign minority shareholder in the project, has already announced it would be leaving it and is looking for buyers. The Japanese shareholders, however, were in no rush to leave.
"We continue to work on finding an acceptable arrangement that enables us to withdraw from our share in Sakhalin Energy in line with applicable legal requirements and project agreements," the supermajor said earlier this week, per Reuters.
Under the terms of a new decree announced earlier this month, Mitsui and Mitsubishi could claim their stakes in the new company within the next month.
The two companies said today they will cooperate with the Japanese government and with their business partners "to decide on whether or not they would join the new entity," Reuters reported.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.
In so doing, Japan is ignoring Western sanctions against Russia for the sake of its energy security. The two projects are crucial for energy security allowing Japan to procure supplies below the market price, especially amid current high energy prices. Japan is one of the biggest LNG importers in the world and gets about a tenth of the LNG it consumes from Russia.
President Putin signed today a new decree banning companies from what Russia considers ‘unfriendly’ countries from selling stakes in key Russian energy projects and oil and gas production sharing agreements.
This means that major foreign companies which withdrew from Russia such as BP, Shell and ExxonMobil can’t sell their shares to non-Russian entities. They will be either nationalized as was the case with Shell’s investment in the Sakhalin-2 LNG project or bought on the cheap by Russian companies and the Russian government.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert