Japanese authorities believe stakes in Sakhalin-2 will help ensure continued gas supplies
The Japanese government has called on Mitsubishi and Mitsui to keep their shares in the Sakhalin-2 Liquefied Natural Gas project after its transfer to a Russian operator, The Nikkei reported on Saturday.
“The companies have shares [in Sakhalin-2], so we agreed that they should hold them tight,” Japanese Minister of Economy, Trade and Industry Koichi Hagiuda told reporters after meeting with Prime Minister Fumio Kishida, as cited by the news outlet.
Sakhalin-2 produces 10 million tons of LNG per year, and about 60% of the project’s output is exported to Japan. On June 30, Russian President Vladimir Putin signed a decree according to which Sakhalin-2 operator Sakhalin Energy Investment Company, in which Japan’s conglomerates Mitsui and Mitsubishi own 12.5% and 10%, respectively, becomes the property of a company that will be created by the Russian government.
According to The Nikkei, Tokyo can continue to buy gas without participating in the project under its new operator, as long as existing contracts are in place. However, there is a possibility of a disruption in supplies, and Japanese authorities believe that by retaining their stakes in the project, Mitsui and Mitsubishi could ensure the continued flow of Russian LNG to the country. At the same time, the newspaper notes that “there is no guarantee that the new operator will continue to reliably supply LNG to Japan,” even if Mitsubishi and Mitsui remain among the shareholders.