Japan to support its firms’ stake in Sakhalin-2 project
A chimney emits fire at the PCK Raffinerie oil refinery in Schwedt/Oder, Germany, March 7, 2022. The company receives crude oil from Russia via the 'Friendship' pipeline. Picture taken March 7, 2022. PHOTO: REUTERS
The Japanese government plans to support Mitsui and Co and Mitsubishi Corp in their attempts to stay in the Sakhalin-2 oil and gas project, three sources said, after Russia seized control of the development key to Japan’s energy supply.
There has been speculation whether the Japanese firms would remain in the consortium, as Tokyo-Moscow tensions rise over Russia’s invasion of Ukraine. Japan has joined Western sanctions
on Russia.
Japan’s trade and industry ministry will be relaying the decision to the firms shortly, said the three people with knowledge of the matter. They asked not to be named because the information is not public.
Resource-poor Japan faces a historic energy security risk as tensions intensify with global supply tight and prices sky high. Japan imports 10% of its liquefied natural gas from Russia, mainly under a long-term contract from Sakhalin-2.
Japan’s effort is likely aimed at sending a clear signal of government backing for the project and bucks moves by Western nations that have prohibited private companies from making new investments in Russia.
The people declined to give details on what the Japanese government will do to help the trading houses maintain
their stakes.
Prime Minister Fumio Kishida said on Thursday the government would work with the private sector on the matter, as Japan aims to secure its right and stable supply of liquefied natural gas.
Mitsui and Mitsubishi representatives said on Saturday the companies will discuss the matter in collaboration with the government as well as their partners.
Published in The Express Tribune, July 17th, 2022.
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