Tokyo expects "freeze" of Sakhalin projects: press
Japan's industry minister Koichi Hagiuda expects projects that Japanese companies are involved in off the coast of Sakhalin island in the Russian Far East to "effectively freeze" following withdrawal of ExxonMobil and Shell, Reuters reported on March 8.
The minister said Tokyo was carefully watching operations off Sakhalin island after ExxonMobil and Shell announced they would be exiting the Sakhalin-1 and Sakhalin-2 projects respectively in light of Russia's invasion of Ukraine. The projects will "effectively freeze", he said, without indicating whether production would be immediately affected.
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Tokyo is reluctant to relinquish its stakes in the Russian Far East in case China or another third country neutral to Russia takes over its position. This leaves the government facing a dilemma once the two Western majors cease their involvement.
"Our main concern is whether a third country might immediately take over when we let go of our interests there," Hagiuda said in a session at Japan's parliamentary Diet. "If Russia doesn't feel the pain from the sanctions, then it would be pointless."
The Japanese shareholders at the Sakhalin-2 project, trading firms Mitsui & Co and Mitsubishi, have rejected suggestions they would sell their stakes and say the project continues to operate as normal. A similar line was taken at Sakhalin-1 by Sakhalin Oil and Gas Development (SODECO), the Japanese consortium that features oil producers Itochu and Japex, Reuters said.
Hagiuda said Japanese energy supplies remain unaffected for now, but noted that Tokyo has promised to follow the G7 consensus should it lead to US-led sanctions on Russian oil exports. Reuters reports that the US is pressing ahead with a ban on Russian crude, despite its European allies being hesitant.
ExxonMobil operates Sakhalin-1 with a 30% stake with partners Rosneft (20%), SODECO (30%) and OGNC Videsh (20%). At Sakhalin-2, Gazprom is the operator with a 50% interest plus 1 share, followed by exiting participant Shell (27.5% plus one share), Mitsui (12.5%) and Mitsubishi (10%) .