THE ASAHI SHIMBUN
July 1, 2022 at 19:01 JST
A liquified natural gas production complex in Sakhalin, Russia (Asahi Shimbun file photo)
Government and company officials were scrambling after a media report that Russian President Vladimir Putin had issued an order about a new company taking over the assets of the operator of the Sakhalin II liquified natural gas project.
Speaking to reporters on July 1 while he was on the campaign trail in Okinawa Prefecture, Prime Minister Fumio Kishida said, "I do not believe the order will lead to an immediate stoppage of LNG shipments."
Asked about the report that Putin had signed the order, Deputy Chief Cabinet Secretary Seiji Kihara said at his July 1 news conference, “As a general point, it is unacceptable to have rights related to our nation’s natural resources hindered.”
However, he only added that the government was also looking into how the order would affect the stakes of the affected Japanese trading companies and LNG imports.
Two Japanese trading companies have stakes in the project. Japan relies on Russia for 8.8 percent of its LNG imports, with much of it coming from the Sakhalin II project.
The announcement was vague about whether Japanese companies could continue to maintain its stake after the assets of the project operator, Sakhalin Energy Investment Co., are transferred to a new Russian company.
That left open the possibility that the presidential order would lead to the seizure of the project by Russia.
The measure is being viewed as a retaliatory move against Japan for going along with Western nations in implementing various sanctions against Russia after its invasion of Ukraine.
Shell Plc of Britain pulled out of the Sakhalin II project just days after the Russian invasion.
Mitsui & Co. holds a 12.5-percent stake, while Mitsubishi Corp. has a 10-percent stake.
Officials of the economy ministry, which oversees energy policy, were trying to determine what the presidential order might mean for Japan’s energy supply.
A number of electric power and gas companies procure their LNG from the Sakhalin II project, with Hiroshima Gas Co. procuring about half of its LNG from the venture.
But those companies were declining comment on July 1 as they were also trying to determine if the order means they will not be receiving LNG shipments in the future.
While Japan has gone along with the other Group of Seven nations in agreeing to gradually stop imports of Russian coal and petroleum, it has been more reticent about a similar step regarding LNG because there are few options for alternative sources.
(Shiki Iwasawa and Junichiro Nagasaki contributed to this article.)
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