- BBC News World
Russia took control of a major oil and gas project with Britain’s Shell owning 27.5% and Japan’s Mitsui and Mitsubishi another 22.5%.
Last weekend, Russian President Vladimir Putin signed a decree to seize Sakhalin-2, in a move that would particularly affect Japan.
Action can be forced Shell, Mitsui and Mitsubishi Abandon their investments as the economic fallout from the war in Ukraine spreads.
Oil major Shell said: “We are aware of the mandate and are assessing its implications.”
This is stated in the decree A new company will take over all the rights and obligations Sakhalin’s Energy Investment.
Shell signaled in February that it would sell its Russian investments due to the conflict in Ukraine, including the flagship Sakhalin-2 facility in Russia’s Far East.
The company said in April that leaving Russia would mean $4.6 billion.
Plan to supply around 4% of the global market Current liquefied natural gas (LNG), 50% owned and operated by Gazprom.
According to the decree, Gazprom will retain its stake, but other shareholders will have to apply to the Russian government to take part in the new company within a month.
Government It will then decide whether to allow them to hold the shares.
According to earlier reports by The Daily Telegraph and Reuters, Shell is in talks with potential buyers for its stake in the project, including some from China and India.
The company’s chief executive, Ben van Beurten, said on Wednesday that Shell was “making good progress” on plans to exit the joint venture.
“I can’t say exactly where we are because it’s a business process, so I have to respect confidentiality, but when I got an update last week I was very happy with where we are,” he said.
Analysis by Theo Leggett
BBC Business Correspondent
This seems to be a deeply political move. The impact is likely to be felt most deeply in Japan, which is heavily involved in economic sanctions against Russia.
Three foreign companies hold significant stakes On Sakhalin-2: Shell, Mitsui and Mitsubishi.
But Shell has already written down the value of its Russian assets and said it is leaving the country.
Meanwhile, Japan relies heavily on imports of liquefied natural gas.
Competition for exports worldwide is fierce now, and Sakhalin’s project is the only one It currently meets 8% of its requirements.
So the prospect of Russia hijacking Japanese interests in this project is sure to elicit an uneasy response in Tokyo.
If Russian supplies to Japan are cut off, wantFind new resources Elsewhere, competition for available products will increase.
At a time when energy costs are already fueling inflation, that could push up prices globally.
The five-page decree, which comes amid Western sanctions on Moscow over its invasion of Ukraine, says it is up to the Kremlin to decide whether foreign partners should remain in the alliance.
Although Japan asked to leave, They will not give up their interests In the Sakhalin-2 project, its energy is critical to safety.
Shares of Mitsui and Mitsubishi fell 6% in Friday trading, on worries about losses, while the broader Nikkei index fell 1.9%.
A Mitsubishi spokesman said the company is in talks with Sakhalin Energy and its partners in the Japanese government. How to respond to Putin’s mandate
Mitsui did not immediately respond to a BBC request for comment, but told Nikkei Asia it was “in the process of confirming the facts”.
Mitsui has a 12.5% stake in the project, Mitsubishi a 10% stake, with Shell holding a 27.5% minus one stake. Russian gas company Gazprom owns 50% and one share.
Japan, South Korea and China are major customers for oil and LNG exports, according to Shell.
Japanese Chief Deputy Cabinet Secretary Seiji Kihara said the government Examining the content of the mandate and analyzing Moscow’s intentions.
“Generally speaking, our country’s interests in resources should not be affected,” he told a regular news conference, declining to say whether Japan was in contact with Moscow on the matter.
Japanese Industry Minister Koichi Hagiuda said the government did not see the order as a demand.
“The decree does not mean that importing LNG from Japan will become impossible immediately, but it is necessary to take all measures to prepare for unexpected situations,” he said.
pressure on the gas
Russian LNG production could be affected over time by projects like Sakhalin-2, noted Saul Kavnik, head of integrated energy and resources research at Credit Suisse. Foreign expertise and accessories are not available.
“This will make the LNG market materially tighter this decade,” he said.
He pointed out that any increase in Russian government involvement would make it more difficult for many buyers to acquire these projects.
And he said Japan Urgently looking for alternative options supply.
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