The Japanese government explained the refusal to withdraw from Sakhalin-2
Despite the condemnation of the Russian military operation in Ukraine and sanctions against RUSSIA, Japan will not withdraw from Sakhalin-2. The government fears that 27.5% of Shell will be bought out by CHINA Lunskaya-A platform of the Sakhalin-2 project =
Japan will not withdraw from the Sakhalin-2 oil and gas project for fear that another country may take its place. This was announced by the Minister of Economy, Trade and Industry Koichi Hagiuda at a cabinet meeting, reports Sankei.
Khagiuda drew attention to the fact that the Anglo-Dutch Shell had already begun negotiations on the sale of its stake in Sakhalin-2 to a Chinese oil company.
“Withdrawal [from the project] will not be an effective sanction if a third country acquires a stake,” the minister said and noted that the refusal to invest in Sakhalin-2 would lead to an increase in resource prices and thus benefit Russia.
BLOOMBERG reported that the interest of Chinese state-owned oil companies in buying a stake in Sakhalin-2 is forcing Japan's Mitsubishi and Mitsui to continue their joint venture with Gazprom. They own 22.5% of the project, and most of the liquefied natural gas produced there is supplied to Japan. Shell owns a 27.5% stake in Sakhalin-2, another 50% belongs to Gazprom.
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At the end of March, Japanese Prime Minister Fumio Kishida emphasized that the country would not withdraw from the project, as it is extremely important for the country's energy security, contributes to long-term, inexpensive and stable supplies, Nikkei reported. Tokyo Gas CEO Takashi Uchida warned that pulling out of the project would disrupt gas supplies to Japan. “It is physically impossible to completely replace Russian gas with spot supplies,” he said.
The Sakhalin-2 plant was built in 1994 under a production sharing agreement signed by Sakhalin Energy (then controlled by Shell), the Russian government and the administration of the Sakhalin Oblast. Shell (55%), as well as Japanese Mitsui (25%) and Mitsubishi (20%) were shareholders of Sakhalin Energy when it was created. In April 2007, Rosprirodnadzor accused the plant of numerous environmental violations and $30 billion in damage to nature. Then Gazprom joined the Sakhalin-2 participants and gained control over the company (50% plus one share), the founders' shares fell by half.
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On February 28, Shell announced it was withdrawing from joint ventures with Gazprom, including from Sakhalin-2, due to the Russian military operation in Ukraine and Western sanctions. “We are shocked by the loss of life in Ukraine as a result of a senseless act of military aggression that threatens European security,” Shell CEO Ben van Beurden said in a statement.
On April 21, Bloomberg reported that Chinese CNOOC, CNPC and Sinopec are negotiating with Shell to buy a 27.5% stake in Sakhalin-2. At the same time, the agency noted that the discussions are at an early stage and there is a possibility that the deal will not take place.