Putin Orders Transfer of Sakhalin-2 Project

Economy

Tokyo, July 1 (Jiji Press)--Russian President Vladimir Putin has launched a decree to transfer rights to the Sakhalin-2 oil and natural gas development project, currently involving Japanese trading houses, to a new Russian company.

The decree, signed Thursday, said the transfer is a special economic measure in response to unfriendly actions. This is taken to mean that Russia will effectively seize the project in retaliation for sanctions imposed on Moscow over its invasion of Ukraine.

The development makes it uncertain whether the Japanese firms can stay in the project.

Sakhalin Energy Investment Co., the operator of the Sakhalin-2 project off the Russian Far East island of Sakhalin, is about 50 pct owned by Russia's state-run Gazprom, 12.5 pct by Japanese trader Mitsui & Co. <8031> and 10 pct by Mitsubishi Corp. <8058>, also a Japanese trading house.

Japan receives about 60 pct of the liquefied natural gas produced in the project, whose annual output is about 10 million tons. The transfer of the project to a Russian company is likely to affect Japan's energy procurement.

[Copyright The Jiji Press, Ltd.]

Jiji Press