Japan unhappy after Russian decree on joint gas project

Japan said on Friday that its energy interests should not be “hindered”, as a new Kremlin decree provides for the transfer to a Russian company of the rights to an oil and gas project in which Japanese companies are involved.

Mitsui & Co and Mitsubishi Corp together hold a 22.5% stake in the Sakhalin-2 project, located in the Russian Far East, whose liquefied natural gas (LNG) is mainly delivered to Japan.

Shortly after the outbreak of war in Ukraine in late February, British oil giant Shell decided to divest itself of its assets in Russia, including its 27.5% stake in Sakhalin-2.

While joining the Western sanctions against Moscow, Japan had said it wanted to stay on board this strategic project, as a country very dependent on its imports of fossil fuels. Some 8% of the LNG imported by Japan comes from Russia.

The decree signed Thursday by Russian President Vladimir Putin provides for the transfer of all shares of Sakhalin-2 to a new Russian company created by the state.

The Russian giant Gazprom must keep its current share of 50%, while foreign partners have a month to say if they wish to take shares in the new company and will have to obtain the green light from Moscow in this case, according to the text.

Japan is “carefully examining” the Kremlin’s decision and its impact on LNG imports from Russia, Deputy Secretary General of the Japanese Government Seiji Kihara said Friday at a press briefing.

“In general, we believe that our interests in resources (energy, editor’s note) should not be hindered,” added Mr. Kihara, without specifying how Japan intended to react.

Mitsui & Co and Mitsubishi Corp, whose shares fell on the Tokyo Stock Exchange on Friday, were reviewing the details of the decree and consulting with the Japanese government, according to spokespersons for the two companies interviewed by AFP.

Japan is currently experiencing scorching temperatures that are undermining its electricity network. The government has repeatedly warned this week of potential power shortages in the Greater Tokyo area.

Businesses and individuals in Japan have been told to limit their electricity consumption for three months starting this Friday.

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