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April 1, 2022

Japan to retain stake in Russian gas project

The decision comes despite exit plans announced by the other Sakhalin 2 project partners after Russia attacked Ukraine.

Understand the impact of the Ukraine conflict from a cross-sector perspective with the Global Data Executive Briefing: Ukraine Conflict

Japan Prime Minister Fumio Kishida has said that the country will retain its stake in the Sakhalin-2 liquefied natural gas (LNG) project in Russia, as the project is essential to its energy security, reported Reuters.

The decision comes despite exit plans announced by project partners from other countries in response to Russia’s invasion of Ukraine.

In a parliamentary session, Kishida said that “it is not our policy to withdraw” from the Sakhalin-2 project.

“It is an extremely important project in terms of energy security as it has contributed to the long-term, stable supply of inexpensive liquefied natural gas.

“We will step up efforts to reduce our reliance on Russia for energy in line with a Group of Seven nations plan.”

Japan imports 4% of its crude oil and 9% of LNG from Russia, making Moscow a vital energy supplier.

Japan’s trading houses Mitsubishi Corp, and Mitsui & Co own 10% and 12.5% stakes, respectively, in the Sakhalin Energy Investment Company, which is the operator of the Sakhalin 2 project.

Russia’s state-owned energy giant Gazprom owns a 50% stake in the project, in which Shell recently announced plans to exit.

Sakhalin Energy produces 150,000 barrels per day of crude oil from the field, located in the north of Sakhalin. It also has an LNG production capacity of 9.6 million tonnes per annum.

The project infrastructure includes an onshore processing facility, three offshore platforms, offshore and onshore pipelines, an oil export terminal, and an LNG plant.

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