Russia’s Gazprom to get 50% of Sakhalin-2 LNG project replacement entity -reports

Japanese trading houses Mitsui & Co and Mitsubishi Corp on Tuesday cut the value of their stakes in the Sakhalin-2 LNG project by 217.7 billion yen ($1.62 billion) after Moscows move to seize control of it.

Western countries and their allies, including Japan, imposed tough sanctions on Russia after it sent troops into Ukraine in late February. Moscow retaliated by putting obstacles on western businesses and investors leaving Russia, including in some rare cases by seizing assets.

Interfax reported that Gazprom will get just over a 50% stake and the remaining 49.99% will be held by the new company itself until after existing Sakhalin-2 shareholders apply for a stake which they should do within a month.

If foreign shareholders, which also include Royal Dutch Shell with a 27.5% stake, do not apply for a share in the new entity, it will be evaluated and sold by the government to a Russian entity, Interfax said, citing an Aug. 2 decree.

After the reports, Japans government reiterated its intention to have the Japanese companies retain their stakes in the project.

“The Sakhalin-2 project is extremely important for stable energy supply to Japan, and we will basically continue to maintain the stakes,” Japanese industry minister Koichi Hagiuda told reporters on Thursday. The government is looking into details of the new entity, he said.

Mitsui and Mitsubishi, which hold a combined 22.5% stake in the project, said separately that they are examining details of the new entity, and they plan to respond by cooperating with the Japanese government and with each other.

The Japanese government has said it planned to support the trading companies in their attempts to stay in the Sakhalin-2 project. Japan imports about 10% of its LNG from Russia, mainly from Sakhalin-2.