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August 31, 2022

Russia approves 12.5% stake transfer in Sakhalin Energy to Mitsui unit

The Sakhalin 2 project operator, Sakhalin Energy, also signed a new long-term contract to deliver liquefied gas to Japan’s Tokyo Gas.

The Russian government has approved the transfer of a 12.5% stake in Sakhalinskaya Energija (Sakhalin Energy ), the new operator of the Sakhalin 2 liquefied natural gas (LNG) plant in the Russian Far East, to Japanese trading house Mitsui’s subsidiary MIT SEL Investment, reported Reuters.

The move comes after a decree was signed by Russian President Vladimir Putin in June 2022 to transfer the operatorship of the Sakhalin-2 project to a new legal entity, Sakhalin Energy .

This new entity will deal with buyers and shareholders, which include Shell and Japanese trading houses Mitsubishi and Mitsui.

The order follows sanctions imposed on Russian by the Western nations in the wake of Moscow’s ‘special military operation’ in Ukraine.

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’s gas supplier Tokyo Gas has also signed a long-term contract with Sakhalin Energy to purchase liquefied gas from the Sakhalin-2 project, Reuters reported, citing a Japanese company spokesperson.

The new LNG supply contract’s main conditions, including volume, remained the same as the previous contract.

Sakhalin-2 is an integrated oil and gas project and is also Russia’s first offshore gas project.

The Sakhalin Energy Investment Company was previously the project operator, owned by Gazprom , Shell , Mitsui, and Mitsubishi .

In a separate announcement, US oil major Exxon Mobil has announced its intention to sue the Russian government for blocking it from exiting the Sakhalin-1 project, its only remaining operation in the country, reported Bloomberg News.

Earlier this month, Russia issued a presidential decree to stop Exxon from exiting the Sakhalin-1 project in the country’s Far East.

The decree comes days after the oil major was in negotiations with an undisclosed firm for the transfer of its 30% stake in the Sakhalin-1 project.

Exxon was quoted by the publication as stating: “We have provided a notice of difference to the Russian Federal Government regarding the decree, which inhibits our rights and impedes our ability to exit operations safely.”

Amid the Russia-Ukraine conflict, Russia’s gas giant Gazprom plans to fully suspend gas supplies to French utility company Engie from 1 September 2022, further deepening Europe’s concerns over winter energy supplies, reported Reuters.

The Russian firm said it would resume supplies to the French firm after receiving all payments for gas in full.

In a separate development, Gazprom ’s subsidiary Gazprom Neft launched a new oil refining unit at the Zhagrin field in the Khanty-Mansi Autonomous Okrug, reported Reuters.

The new unit is expected to increase the field’s oil production from 2.5 million tonnes to 5.5 million tonnes in 2022.

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