Russia allows Japan to keep stake in Sakhalin-1 oil, gas project

The Russian government has decided to allow Japan to maintain its stake in the Sakhalin-1 oil and gas development project in Russia’s Far East, the Japanese government said on November 15.

“The decision is very significant for stable energy supplies to our country over the medium to long term,” Chief Cabinet Secretary Hirokazu Matsuno told reporters, The Japan Times reports.

Moscow approved the transfer to Japanese public-private company Sakhalin Oil and Gas Development Co. of 30% shares in a new Russian company that has taken over the Sakhalin-1 project, unchanged from the previous stake in the project, the trade ministry said.

Russia had already made a similar move over the Sakhalin-2 oil and gas project, allowing Japanese trading houses Mitsui and Mitsubishi to maintain their stakes in the project.

Sakhalin Oil and Gas Development was created chiefly by the Japanese government and major traders Itochu and Marubeni.
Tokyo had presented its policy of maintaining Japan’s interest in Sakhalin-1, hoping to reduce the country’s oil dependence on the Middle East, which stands at about 90 per cent.

According to Russia’s state-run Tass news agency, Moscow has also decided to allow an overseas subsidiary of India’s Oil and Natural Gas to maintain its 20 per cent stake in Sakhalin-1.

Meanwhile, U.S. oil major ExxonMobil, which had a 30 per cent stake in Sakhalin-1, has fully withdrawn from the project in response to Russia’s invasion of Ukraine.

The new Russian company was launched Oct. 14 after Russian President Vladimir Putin signed a presidential order Oct. 7 to transfer the Sakhalin-1 operations to the new company.

Moscow gave foreign parties to the project one month to tell the Russian side whether they wished to keep their investments in the project.

Earlier this month, trade minister Yasutoshi Nishimura said that the Japanese side would apply soon to maintain its interest.