Japan’s Mitsubishi Corporation is set to issue a notice that it will join the new operating company for the Sakhalin-2 LNG export complex in the Russian Far East, reported Nikkei Asia.
In August, Russia transferred operation of the project to a new company, forcing Japanese participants Mitsui and Mitsubishi to decide whether they would continue their investment. Mitsui has also decided it will announce its continued participation in Sakhalin-2. Both companies are expected to announce their plans by the end of the month while closely watching developments in Russia, the business publication said today.
The Japanese government believes it will be easier to stably procure liquefied natural gas (LNG) from Sakhalin-2 if both companies join the new operating company and the trading houses fell in line.
“After receiving notice from the Japanese companies, Russia’s government is expected to decide within three days whether to allow their participation in the new operating company. The two trading houses would need to renegotiate their shareholders’ agreement with the new operating company. How Russia might respond is unpredictable,” noted the Nikkei.
Japanese trading houses Mitsubishi and Mitsui own a combined 22.5% in Sakhalin-2. Japan is the biggest buyer of LNG from the plant that’s been operating since 2009.
Shell (LON:SHEL), with a 27.5% stake in the facility, announced it would exit the project after Russia invaded Ukraine. Its chief executive officer, Ben van Beurden, previously said the energy major is “entirely unlikely” to take a stake in the new Sakhalin entity.