Japanese energy providers Tokyo Gas Co. and Kyushu Electric Power Co. said Tuesday they have renewed their contracts to buy liquefied natural gas from the Sakhalin 2 oil and gas project in Russia.
The decision follows Moscow's establishment of a new operator for the project in the Russian Far East after Western energy firms withdrew their investments following the invasion of Ukraine.
Japan is largely dependent on imports for energy production, and the Sakhalin 2 project accounts for about 9 percent of its LNG imports. The country's major power generation firm Jera Co., a joint venture between Tokyo Electric Power Company Holdings Inc. and Chubu Electric Power Co., renewed its contract Thursday to purchase gas from the project.
The new operator, established on Aug. 5 under a decree by Russian President Vladimir Putin, has offered the same contractual terms to energy companies. Russian state energy firm Gazprom has a controlling stake in it.
Tokyo Gas said contract terms remained the same, while Kyushu Electric Power did not comment on the terms of its agreement dated Aug. 29.
Although U.S. and European oil majors have withdrawn from natural resources projects in the Russian Far East, including the decision by Britain's Shell PLC to relinquish its 27.5 percent share in Sakhalin 2 over Russian aggression, Tokyo views the project as important to its interests.
Major trading houses Mitsui & Co. and Mitsubishi Corp., which held stakes of 12.5 percent and 10 percent, respectively, in the previous operator, are also set to retain their interests with the Japanese government's backing.