Japan's government intends to secure participation in Sakhalin-2

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The Japanese government intends to ensure its participation in the Russian Sakhalin-2 oil and gas project, according to the Japanese news agency Kyodo, citing official sources.

The government is now in talks with Japanese corporations Mitsui and Mitsubishi regarding participation in the project. In early July, Russian President Vladimir Putin issued a decree for Russia to establish a new project operator to take over Sakhalin-2 from Sakhalin Energy Investment Co, according to the article.

Gazprom of Russia will retain a 50 percent plus one shareholding. Shell has already pledged to sell its 27.5 percent interest, while Mitsui and Mitsubishi are said to be holding 12.5 percent and 10 percent stakes, respectively.

The infrastructure consists of three offshore platforms, an integrated onshore processing complex, an oil shipping terminal, and a 9.6 million tonnes per year LNG plant.

The project provides Japan with 10 percent of its total LNG imports. Sakhalin-2 contributes to around 9 percent of Japan's LNG imports. 

Earlier this month, a senior Japanese official told the Yomiuri Shimbun Daily that Tokyo will protest any discrimination against the Mitsui and Mitsubishi holding companies in the Sakhalin-2 oil and gas project.

"Contracts with Japanese enterprises must be honored," the official in the Japanese Foreign Ministry was quoted as saying in a published article. 

On Thursday, Russia's President signed a decree allowing Moscow to establish a new operator to take over the Sakhalin-2 project from Sakhalin Energy Investment Co.

Mitsui, Mitsubishi to continue participation 

Japanese corporations Mitsui and Mitsubishi will continue their participation in the Russian Sakhalin-2 project, in which their joint share amounts to 22.5 percent, the Nikkei newspaper reported, citing informed sources.

According to the newspaper, Japan’s interests in the project are significantly different from those of Europe. In particular, in early March, Mitsui and Mitsubishi sent documents to the Japanese Economy Ministry, which include statements about the risks of an early exit from the project, and this being “in interests of China.”

Nikkei estimated that around 60 percent of the liquefied natural gas (LNG) produced at Sakhalin-2 is intended for supplies to Japan, which constitutes most of the LNG deliveries from Russia to Japan.

Sakhalin 2 project

The Sakhalin 2 project is exploring two reserves - Piltun-Astokhskoye and Lunskoye - in the Okhotsk Sea. The infrastructure includes three offshore facilities, an onshore processing facility, an oil shipping terminal, and an LNG plant.

The Sakhalin Energy company manages the project. Fifty percent plus one share of Sakhalin Energy belongs to the Russian company Gazprom, 27.5 percent minus 1 share — to Shell, 12.5 percent to Mitsui & Co. Ltd, and 10 percent to Mitsubishi Corporation.