Japanese companies to stay with Russian energy project

Mitsubishi and Mitsui have been approved to keep their stakes in Sakhalin-2 under the new operator

Moscow has approved the application of Japan’s Mitsubishi to continue its participation in the Sakhalin-2 liquefied natural gas (LNG) project following its transfer to a new operator, according to a government order published on Wednesday.

The order signed by Prime Minister Mikhail Mishustin said the government approved Mitsubishi’s request to transfer a 10% stake in the old operator to an equal stake in Sakhalin Energy, a Russian company which has taken over ownership of the vast LNG project in the country’s Far East.

On Tuesday, the Kremlin approved a separate application from Japan’s Mitsui to transfer its 12.5% stake in the project to the new entity.

In June, Russian President Vladimir Putin ordered the reorganization of the Sakhalin-2 enterprise, transferring ownership from its Bermuda-based operator to a new domestic company. Foreign shareholders were then told they would have to reapply to maintain their stake in the project. The move came in response to sanctions from ‘unfriendly countries’.

Sakhalin-2, one of the world’s largest LNG projects with an annual output of 12 million tons, was launched in 2009 as a joint venture between Russia’s Gazprom, Japan’s Mitsui and Mitsubishi, and UK-based Shell. The enterprise, located on the Russian island of Sakhalin in the Pacific Ocean, north of Japan, supplies LNG mainly to Asian markets.

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