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Russian President Vladimir Putin has signed a decree to hand over the rights and obligations of the Sakhalin-2 natural gas project to a newly created company.

The move comes amid sanctions imposed on Russia by Western countries in the wake of its military action against Ukraine.

As per the decree, The Russian Government holds the right to decide the participation of foreign shareholders in the Sakhalin Energy Investment Company, a consortium developing the Sakhalin-2 oil and gas project in Russia’s far east, reported Reuters.

The consortium currently includes Russian gas firm Gazprom (50% plus one share), Shell (27.5% minus one share), and Japanese firms Mitsui & Co (12.5%) and Mitsubishi (10%).

Gazprom will retain its stake in the new company while other shareholders are required to seek permission for a stake from the Russian Government within a month.

The government will then announce its decision on whether the other shareholders can retain their respective stakes in the project.

In case the permission is denied by the government, the stakes would be divested while the proceeds from the sale would be moved to a special account of the shareholder.

These proceeds can either be used to repay unspecified damages or be sent to the shareholder under the production sharing agreement, according to the decree.

The stakeholders who choose to exit the project may not be fully compensated, reported Bloomberg News, citing a statement.

In May, Reuters , citing three sources, reported that Shell was in talks to divest its stake in the Sakhalin-2 project to a consortium of Indian energy companies.

In the same month, the Japanese industry minister said the country would not exit the Sakhalin-2 project as it is considered important for the nation’s energy security.