Japan Will Not Exit From Sakhalin-2 LNG Project In Russia As It Essential To Energy Security, PM Kishida says

by India Infrahub - Mar 31, 2022 04:20 PM +05:30 IST
Japan Will Not Exit From Sakhalin-2 LNG Project In Russia As It Essential To Energy Security, PM Kishida says
Sakhalin-2, Gazprom-Shell JV
Snapshot
  • Japan will not abandon its stake in Russia's Sakhalin-2 liquefied natural gas (LNG) project as it is essential to energy security, Prime Minister Fumio Kishida said today (Mar 30).

    Sakhalin-2 is one of the world’s largest integrated, export-oriented, oil and gas projects, as well as Russia’s first offshore gas project with estimated capacity of 11.49 million tonnes.

Japan will not abandon its stake in Russia's Sakhalin-2 liquefied natural gas (LNG) project as it is essential to energy security, Prime Minister Fumio Kishida said today (Mar 30).

"Japan has a stake in Sakhalin-2, which is contributing to securing the long-term, stable and low-priced supply of LNG. It is an extremely important project for Japan's energy security," Kishida informed the country's parliament.

"It is not our policy to withdraw," Kishida said, adding his government would continue to pursue a path to reduce dependence on Russian energy sources.

Replacing Sakhalin-2 LNG, which almost runs on long-term contracts with spot purchases, would add about 1.8 trillion yen ($15 billion) to the cost of Japan's imports.

Sakhalin-2 is one of the world's largest integrated, export-oriented oil and gas projects and Russia's first offshore gas project with an estimated capacity of 11.49 million tonnes.

The project infrastructure includes three offshore platforms, an onshore processing facility, 300 kilometres of offshore pipelines and 1,600 kilometres of onshore pipelines, an oil export terminal and a liquefied natural gas (LNG) plant.

Sakhalin Energy Investment Company Ltd., the project operator, is owned by Gazprom, Shell and Japanese leading trading houses Mitsui and Mitsubishi. However, following the Russia-Ukraine conflict, oil supermajor Shell, which held a 27.5 per cent interest in Sakhalin-2, announced that it would be exiting the project.

Mitsui & Co and Mitsubishi Corp own stakes of 12.5% and 10% respectively in the Sakhalin-2 project. Gazrom holds a 50% stake in the project.

Sakhalin-2 supplies about 4% of the world's current LNG market. Japan, South Korea and China are the main customers for oil and LNG exports. Roughly about of 60% of the output going to Japan. This nearly accounts for all of Japan's LNG imports from Russia.

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