India and Japan retain stakes in Russian energy project

Moscow has approved their participation in a bid to rapidly restore production at Sakhalin-1

The Russian government has allowed India's Oil and Natural Gas Corp (ONGC) and Japan's Sakhalin Oil and Gas Development Co (SODECO) to keep their stakes under the new domestic operator of the Sakhalin-1 oil and gas project on Monday.

SODECO will retain its 30% stake and ONGC will keep its 20%, as it was under the previous shareholder structure.

Japan wants to keep its investment in Russia to diversify the country’s energy supply, as it relies on the Middle East for around 95% of its oil imports, according to S&P. Tokyo welcomed the move with Japan's Chief Cabinet Secretary Hirokazu Matsuno calling the decision “extremely significant from the perspective of our country's mid-to-long-term stable energy supply.”

The move by Russia comes after the exit of ExxonMobil, the previous operator and owner of a 30% stake in Sakhalin-1. In October, Russian President Vladimir Putin disbanded Exxon Neftegaz as the operator of the project and transferred all its assets and equipment to a new company managed by Rosneft subsidiary Sakhalinmorneftegaz-Shelf.

Earlier this month, Japanese authorities reportedly urged companies that participated in the original consortium to retain their stakes in the new entity that will operate the Far Eastern offshore project.

“Sakhalin-1 is extremely important for Japan's energy security as it is a valuable source outside of the Middle East,” trade minister, Yasutoshi Nishimura told Reuters in early November.

READ MORE: Japan keeps stake in Russian energy project

Japan's Ministry of Economy, Trade and Industry has a 50% stake in SODECO which comprises the Itochu-led consortium of Japan Petroleum Exploration, Marubeni, Inpex and Itochu Oil Exploration.

Western sanctions have disrupted production at the Sakhalin-1 oil and gas fields, which Russia seeks to restore by the end of the year.

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