Russia is working to take over an important natural gas joint venture, jeopardizing the investment of Shell and Japanese trading companies Mitsui and Mitsubishi.
A project called Sakhalin 2, located on Sakhalin Island in the Russian Far East and a major exporter of fuel to Japan, will be taken over by the new company, according to a decree released by President Vladimir Putin on Thursday.
Shell previously said he plans to withdraw a 27.5 percent stake in the venture as part of an effort to withdraw from Russia following the invasion of Ukraine.
Putin may be trying to thwart those efforts. Under certain circumstances, the Russian government could maintain revenue from any sale, Reuters reported.
Shell said on Friday that he was “assessing” the impact of Russia’s move, but declined to comment further. Shell has already amortized the value of Sakhalin 2 to $ 1.6 billion.
Presidential orders are unlikely to cause significant immediate damage to Shell, Europe’s largest energy company, which reported record $ 9.1 billion in profits in the first quarter of this year due to high oil and gas prices. .. But it could foretell other powerful tactics against Western oil companies that still have assets in Russia.
Shell announced that it would withdraw from Sakhalin 2 and other Russian ventures after the February invasion of Ukraine, but did not set an exact date or indicate what to do with stocks or other ventures. In May, Shell sold a Russian gas station to a Russian private company, Lukoil.
Investment bank Jeffreys estimates that if Sakhalin 2 is abandoned, Shell will also lose its share of the liquefied natural gas exported by the project. That’s about 7% of the company’s global LNG capacity. LNG is an important business for Shell.
Gazprom, a major state-owned energy company, holds a 50% stake in Sakhalin 2, Mitsui holds a 12.5% stake, and Mitsubishi holds a 10% stake. Under the law, Gazprom will need to maintain its share and Shell, Mitsui and Mitsubishi will have to demand new shares. Reuters report.
After this move, the smooth flow of fuel supply from Sakhalin 2 to Japan and other countries may be of utmost concern, but so far Japan has been more against Russia than European countries over the Ukrainian war. We do not take a confrontational approach.
Japan’s Prime Minister Fumio Kishida said the government needs to “pay attention to the types of demands” that the new arrangement may bring. Both Mitsui and Mitsubishi have said that so far there has been no impact on Sakhalin 2 production.
Bendury When Hisako Ueno Report that contributed.
