Japanese stakeholders in the Sakhalin 1 oil and gas project in eastern Russia will retain their stake in the undertaking by joining a new Russian operator recently established under a decree, the industry minister said Friday, as the project remains a vital source of energy for resource-poor Japan.
Japan's government and companies, including major trading houses Itochu Corp. and Marubeni Corp., have invested in the project through Tokyo-based Sakhalin Oil and Gas Development Co. If the Russian side approves the company plan decided at Friday's shareholders meeting, Japan will be able to keep its stake in the project.
The move comes amid international sanctions on Russia over its invasion of Ukraine.
"While Japan is reliant on the Middle East for over 90 percent of its crude oil imports, Sakhalin 1 is an extremely important project as an alternative source outside the Middle East," Economy, Trade and Industry Minister Yasutoshi Nishimura told reporters.
Sakhalin Oil and Gas Development held a 30 percent stake in the project, which started producing crude oil on the island of Sakhalin, north of Japan, in 2005. Under the decree signed by President Vladimir Putin, foreign business partners had one month from the launch of the new operator in October to decide whether to invest in the new company.
Tsuyoshi Hachimura, an executive vice president of Itochu, said at a press conference on its earnings report that it will join the new operating firm of Sakhalin 1 from the perspective of energy security in keeping with the government's policy.
The government has indicated Japan, which is highly dependent on energy imports, will maintain its stake in the Sakhalin 1 and 2 energy projects, despite imposing economic sanctions on Russia over its invasion of Ukraine.
Exxon Mobil Corp. of the United States, a major stakeholder in Sakhalin 1, announced its withdrawal from the project in March.
Russia has authorized investments by Japanese trading houses Mitsui & Co. and Mitsubishi Corp. in Sakhalin 2, while British oil major Shell PLC, which held an approximately 27.5 percent stake in the previous company, exited from the project.
Related coverage:
Putin signs decree to create new operator for Sakhalin 1 oil project
