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September 1, 2022

Russia approves stake transfer in Sakhalin-2 project operator to Mitsubishi

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

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Russia has approved the transfer of a 10% stake in the new operator of the Sakhalin-2 liquefied natural gas (LNG) project in the Russian Far East to Japan’s Mitsubishi, reported Reuters, citing a government order.

Russian Prime Minister Mikhail Mishustin signed the order approving Mitsubishi’s request to transfer a 10% stake in the old operator to an equal stake in Sakhalin Energy, a new entity responsible for the Sakhalin-2 project.

In the wake of Western sanction on Russia due to its invasion of Ukraine, the Russian government signed a decree in June 2022 to transfer the operatorship of the Sakhalin-2 project to a new legal entity.

The move requires foreign shareholders of the Sakhalin-2 project, including Shell and Japanese trading houses Mitsubishi and Mitsui, to reapply to maintain their stake in the new entity.

Said to be one of the one of the world’s largest integrated, export-oriented oil and gas projects, the Sakhalin-2 project comprises three offshore platforms, an onshore processing facility, an oil export terminal, an LNG plant, and offshore and onshore pipelines.

The latest approval comes a day after Russia approved the transfer of a 12.5% stake in Sakhalin Energy to Mitsui’s subsidiary MIT SEL Investment.

Last week, Mitsui and Mitsubishi decided to retain their stakes in Sakhalin Energy, following a request made by the Japanese Government to ‘think positively’ about joining the new entity.

Japan considers the Russian LNG project a key source for its stable energy supplies amid market disruptions.

Earlier this year, Shell decided to withdraw from the Sakhalin-2 project. It has since been in talks with potential buyers.

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