Japan warns on ‘interests’ after Russia gas project decree

TOKYO, July 1, 2022 (AFP) –  Japan‘s energy “interests must not be undermined”, Tokyo said Friday, after Moscow issued a decree transferring operations of a key oil and gas project to a new Russian company.

Japanese trading houses Mitsui and Mitsubishi Corp own 12.5 and 10 percent stakes respectively in the Sakhalin-2 project, but the future of their investments appears uncertain after the Russian decree.

It calls for the establishment of a new Russian operator and requires existing foreign shareholders to apply for the right to participate in the new firm, with Moscow deciding on their inclusion.

Japanese government spokesman Seiji Kihara said Friday that Tokyo was “closely examining the impact on liquified natural gas imports”.

“Speaking generally, we believe our resource interests must not be undermined,” he added, declining to give further comment.

Energy resource-poor Japan relies heavily on LNG imports and had previously ruled out withdrawal from Sakhalin-2 project despite joining Western-led energy sanctions on Russia over the invasion of Ukraine.

Spokesmen for Mitsubishi and Mitsui would say only that the firms were examining the details of the decree in coordination with the government.

The other major stakeholder in the project is oil giant Shell, which has already committed to selling its 27.5 percent stake.

Japan is heavily dependent on imported fossil fuels, in part because many of its nuclear reactors have been offline since the Fukushima meltdown in 2011.

Russia supplies nearly nine percent of Japan‘s LNG demands, with Australian exports accounting for about 40 percent of the Japanese market.

Japan is currently sweltering through a record heatwave, and the government has warned several times in recent days of a power crunch in the Tokyo region.

On Friday, it began a three-month period in which it is asking residents to conserve power, with fears of shortages during the summer heat.

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