--- title: "Meanwhile in Russia’s Far East: Sakhalin LNG" type: "post" post_id: "2530" slug: "meanwhile-in-russias-far-east-sakhalin-lng" canonical: "https://pennyforyourthoughts2.ca/2022/07/04/meanwhile-in-russias-far-east-sakhalin-lng/" markdown_url: "https://pennyforyourthoughts2.ca/2022/07/04/meanwhile-in-russias-far-east-sakhalin-lng.md" json_url: "https://pennyforyourthoughts2.ca/2022/07/04/meanwhile-in-russias-far-east-sakhalin-lng.json" txt_url: "https://pennyforyourthoughts2.ca/2022/07/04/meanwhile-in-russias-far-east-sakhalin-lng.txt" published: "2022-07-04T12:08:41+00:00" modified: "2022-07-04T12:08:41+00:00" author: "penny2" categories: - "Uncategorized" tags: - "Japan" - "NATO" - "Pipelines" - "Russia" - "Ukraine" site_name: "PFYT2" publisher: "" language: "en-US" generator: "easyPress Markdown" generator_version: "1.0.6" --- https://www.naturalgasintel.com/russia-moves-for-control-of-sakhalin-2-lng-jeopardizing-foreign-ownership-stakes/ > Russia is moving to further tighten its grip on the nation’s oil and natural gas supplies, issuing a decree for the country to take over the Sakhalin-2 liquefied natural gas (LNG) export project on Sakhalin Island north of Japan. > > **An executive order signed by Russian President Vladimir Putin to “protect the national interests” calls for establishing a Russian limited liability company to take over the rights of a partnership between Shell plc, Gazprom PJSC and Japanese trading houses Mitsui & Co. Ltd. and Mitsubishi Corp.** The move could ultimately force the foreign entities out of their ownership positions. > > **The “ownership of the company’s property, created within the framework” of a production sharing agreement signed in 1994 “shall be transferred forthwith to the Russian Federation,” according to the executive order that was dated June 30.** > > Stakeholders said Friday that they were reviewing the decree. It has raised red flags in the energy sector, particularly in Japan, which relies on Russia for a significant portion of LNG imports. > > “The move by Putin is certainly unnerving for Japan**, but I don’t think that Moscow is trying to end all LNG deliveries to Japan, because at the end of the day, Japan pays a lot of money for Russian LNG,** **money that the Russian state needs,”** said Yuriy Humber, CEO of the Tokyo energy consultancy Yuri Group. > Russian leader Vladimir Putin signed a decree late Thursday to change the ownership structure of the Sakhalin-2 upstream and LNG project — **a move that might** squeeze out foreign shareholders Shell, Mitsui and Mitsubishi. > > Many Russia watchers have expected Moscow to take nationalization steps in response to the planned exodus of investors from “unfriendly” countries and international sanctions amid the war in Ukraine. > > Kremlin spokesman Dmitry Peskov suggested Friday that the Sakhalin-2 decree is not the start of a nationalization trend. “Each case will be considered individually,” he was quoted as saying. > > Still, even if nationalization does not become widespread, observers do not expect Sakhalin-2 to be the only target. > A newly set up state Russian company will take over the rights and obligations of Sakhalin Energy Investment Co., the joint venture running the Sakhalin-2 oil and gas project, Reuters reported today. > > This could mean a forced exit from the project for Shell and Japan’s Mitsui and Mitsubishi, which are minority shareholders in Sakhalin Energy Investment Co. > > `Shell already said it would leave the project a few months ago `**and has since then been looking for buyers for its stake in Sakhalin-2. `According to earlier reports, a sale could be made to a group of Indian companies.`** **Shell was already leaving with a group of India buyers set to step in.** > **The Japanese companies, however, have not announced intentions to leave the project. I**n fact, earlier this year, Japan’s economy, trade and industry minister, Koichi Hagiuda, said that the Sakhalin-1 and Sakhalin-2 projects “are essentially important for energy security **because the projects allow Japan to procure supplies below the market price, especially amid current high energy prices.”** > > **`Despite its participation in Western sanctions against Russia, Japan continues to buy liquefied natural gas from Sakhalin-2.`** Although it has stated its intention to step up the intake from alternative sources, a complete suspension of Russian energy imports seems unlikely at this point.