Japan to continue discussions with stakeholders to decide Sakhalin-1 project

  • Sakhalin-1 is an important project for the Japanese Minister of Industry
  • Former project operator Exxon Mobil leaves Russia completely
  • Indian ONGC targets stake in Russian entity managing Sakhalin 1

TOKYO, Oct 18 (Reuters) – Japan is still verifying the details of a Russian decree on the giant Sakhalin-1 oil and gas project and will continue discussions with stakeholders from the previous operating consortium to decide whether to invest. in a new Russian operator.

“We have repeatedly said that Sakhalin-1 is a very important project for Japan,” Japan’s Industry Minister Yasutoshi Nishimura said at a press conference on Tuesday. The ministry owns 50% of Sakhalin Oil and Gas Development Co (SODECO), a consortium of Japanese partners including private companies, which owns 30% of the capital of Sakhalin-1.

“We will continue to engage with all relevant parties, including SODECO’s private shareholders, and consider specific steps to take,” Nishimura said.

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Russian President Vladimir Putin earlier this month issued a decree to establish a new operator for the formerly Exxon Mobil-led project, allowing the Kremlin to decide whether foreign shareholders could retain stakes in Sakhalin-1. Exxon (XOM.N) quit Russia altogether after Moscow “unilaterally terminated” its interest in the project this month. Read more

Another shareholder, India’s Oil and Natural Gas Corp (ONGC.NS) is considering taking a stake in the project’s new Russian operator as it seeks to retain a 20% stake in the asset, three sources familiar with the matter said. Read more

According to Putin’s decree of October 7, foreign partners of Sakhalin-1 will have one month after the creation of the new Russian company to apply to the Russian government for shares in the new entity. The new Russian company was registered on October 14.

Amid the sharp depreciation of the yen, Nishimura said the government would support exports from Japanese small and medium-sized enterprises, domestic investment from foreign investors and also the restarting of nuclear power plants, which would help reduce the country’s bill for utilities. imports of liquefied natural gas (LNG).

“Supporting exports, encouraging foreign investment in Japan and restarting nuclear power plants will all help to mitigate the impact of the yen’s depreciation,” he said.

The comments came as the yen fell to a new 32-year low against the US dollar on Tuesday.

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Reporting by Yuka Obayashi; Editing by Muralikumar Anantharaman and Kenneth Maxwell

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