Sunday, November 6, 2022

Japan to Maintain Interest in Sakhalin-1 Project

The Japanese participants in the Sakhalin-1 oil and gas project officially decided to stay there even after Moscow transferred it to Russian jurisdiction with a Russian operator. The relevant notice will be sent to the Russian government by November 11, Minister of Economy, Trade and Industry Yasutoshi Nishimura said today at a press conference in Tokyo.

He is directly related to the project - it is his department that owns half of the shares in the Japanese consortium Sakhalin Oil and Gas Development Co. (Sodeco), which, in turn, has a 30% stake in Sakhalin-1. The Japanese consortium also includes several private companies, including trading-investment corporations ITOCHU and Marubeni.

Earlier, Japanese companies decided to maintain their previous positions in the Sakhalin-2 project, within which a plant for the production of liquefied natural gas (LNG) operates. It has also been transferred under the control of a Russian operator. At a press conference, Minister Nishimura explained this by the extreme importance of both projects for the energy security of his country, which, as you know, has practically no natural resources of its own. This statement is not entirely true. Indeed, Japan receives almost 9 percent of the LNG it needs from Sakhalin-2, which is quite a lot. It is not easy to find a replacement for this volume in the current situation, especially against the backdrop of the European Union’s refusal of pipeline gas from Russia and its replacement with LNG supplies.

However, Japan has not been buying oil from Sakhalin-1 for a long time, and, in fact, is not going to. Minister Nishimura, however, said that participation in this project is important, perhaps for the future. Japan, he recalled, receives 95 percent of the oil it uses from the Middle East, and this, they say, is dangerous.

However, there is another factor that is not talked about aloud in Tokyo. Here they fear that if the Japanese leave the Sakhalin projects, Chinese companies will take their place. And such a turn of events in Tokyo is considered a real threat - therefore, the Japanese will hold on tightly to Sakhalin with its wealth and extreme geographical proximity.

The crises around Sakhalin-1 and Sakhalin-2 arose after the American corporation Esson-Mobil and the British Shell, respectively, decided to leave because of the Ukrainian events. After that, oil production at the same “Sakhalin-1” fell sharply. Japan also fears that it will not be easy to replace Western specialists within the framework of the Sakhalin-2 project.

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