TOKYO: Russian President Vladimir Putin on Thursday signed a decree ordering to transfer the operations of the Sakhalin-2 oil and natural gas development project, currently joined by Japanese trading houses, to a new Russian company, according to a report by Kommersant, a Russian newspaper, in its online edition.

The decree said the transfer is a special economic measure against an unfriendly action, suggesting that Russia will effectively snatch the project in a retaliatory move against sanctions imposed on Moscow over its invasion of Ukraine.

The latest development has made it uncertain whether the Japanese firms can stay in the project.

Sakhalin Energy, which has been running the Sakhalin-2 project off the Russian Far East island of Sakhalin, is about 50 percent owned by Russia’s state-run Gazprom, 12.5 percent by Japanese trader Mitsui & Co.and 10 percent by Mitsubishi Corp., also a Japanese trading house.

Japan receives about 60 percent of liquefied natural gas produced in the Sakhalin-2 project. The transfer of the project’s operations to a Russian company may have an impact on Japan’s energy procurement, pundits said.

According to RBK, a Russian newspaper, all rights belonging to Sakhalin Energy will be transferred to a company to be newly set up by the Russian government. The assets will be handed over for free to the new firm. Shareholders in the current operator other than Gazprom need to decide within a month whether to accept the conditions presented by the Russian government for acquiring stakes in the new company.

After Western countries strengthened their sanctions on Russia imposed in response to its aggression against Ukraine, British oil giant Shell PLC announced its exit from the Sakhalin-2 project. Meanwhile, the Japanese government has continued to regard Sakhalin-2 as an important project in terms of energy security, with Prime Minister Fumio Kishida saying Tokyo will not withdraw from the scheme.

JIJI Press