Russia’s government ordered the establishment of a new operator for the Sakhalin-2 liquefied natural gas (LNG) project in the Far East region, according to a document published in the nation’s legal database.
The entity, called Sakhalinskaya Energija, is to be based in Yuzhno-Sakhalinsk, the main city of the Sakhalin island, where the project is located, according to the order. Russia’s gas giant Gazprom PJSC will hold just over 50% in the company, in line with its ownership in the former operator Sakhalin Energy.
The order follows an earlier decree by President Vladimir Putin, which required transfer of the project operator from Bermuda to a new Russian entity amid risks to the country’s interests and economic security. Foreign shareholders in Sakhalin-2, which in addition to offshore gas fields includes Russia’s first LNG export plant, have one month from the entity’s establishment to decide whether they want to take a holding in the new company.
So far, Russia’s commercial register has no information on Sakhalinskaya Energija.
Shell Plc, with a 27.5% stake in the facility, announced it would exit the project after Russia invaded Ukraine. Its chief executive officer, Ben van Beurden, said the energy major is “entirely unlikely” to take a stake in the new Sakhalin entity.
Japanese trading houses Mitsubishi Corp. and Mitsui & Co own a combined 22.5% in Sakhalin-2. Japan, the biggest buyer of LNG from the plant that’s been operating since 2009, said it needs to study what contracts under the decree would look like, and discuss its response with Japanese stakeholders, Prime Minister Fumio Kishida said on July 1 after the project’s reshuffle was first announced.
Japan has signalled its intention to maintain ownership in the LNG project, reported Nikkei Asia.
The new company will take over all of the assets, rights and workforce of current operator.
Japanese companies “hold those rights now, and we confirmed that we are going to make sure to continue to hold on to them,” Economy, Trade and Industry Minister Koichi Hagiuda — the cabinet’s point man for energy policy — told reporters in July after a meeting with Prime Minister Fumio Kishida, added the Nikkei.
Sakhalin-2 produces 10 million tonnes of LNG a year, of which Japan imports 6 million tonnes.
Japanese trading giants Mitsui and Mitsubishi wrote off a combined 218 billion yen ($1.7 billion) linked to their investments in the Russian liquefied natural gas (LNG) project earlier this week. Mitsui cut the fair value of its investments in the Sakhalin-2 LNG plant by 136.6 billion yen from the level at end-March, it said Tuesday in a regulatory filing, while Mitsubishi recorded a 81.1 billion yen drop.
energy, Energy Voice | Oil and Gas news