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Japan’s Mitsubishi to apply for stake in new Sakhalin-2 LNG operator

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TOKYO — Japanese trading house Mitsubishi Corp said on Thursday it has decided to apply for a stake in the new Russian entity that took over the Sakhalin-2 liquefied natural gas (LNG) project.

The move comes after the Japanese government asked Mitsubishi Corp to “think positively” about joining the new entity as the Sakhalin-2 is a key source of stable energy supplies for Japan.

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Shares in Mitsubishi were up more than 2% after the news, outperforming a broader Nikkei index which was up 0.5%.

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“A resolution was passed this morning regarding the submission of a consent to take a stake. The consent will be filed by the deadline,” a Mitsubishi spokesperson said, referring to the Sept. 4 deadline.

Another shareholder, Mitsui & Co, said it is still in talks with relevant parties, declining to elaborate.

Russian President Vladimir Putin signed a decree in June to take charge of the Sakhalin-2 project in Russia’s far east, raising the stakes in an economic war with the West and its allies.

The order created a new Russian entity to take over all rights and obligations of the previous operator Sakhalin Energy Investment, in which Shell and two Japanese trading companies hold just under 50%.

A Russian government decree signed early in August gave the foreign investors a month to claim their stakes in the new entity.

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Russia’s state gas company Gazprom received just over 50% of the new entity, which is holding the remaining share until existing shareholders apply for a stake.

The Russian government will decide whether to approve any request from the foreign investors within three days.

The move by Mitsubishi was largely expected as the Japanese government has repeatedly said it would support the trading houses in their efforts to stay in the project. Japan imports about 10% of its LNG from Russia, mainly from Sakhalin-2.

Mitsui and Mitsubishi together hold 22.5% in the project.

Separately, Japanese gas and electric utilities with long-term contracts to buy LNG from Sakhalin-2 received a new contract offer from the new Russian operator, which they are currently assessing. (Reporting by Miho Uranaka and Sakura Murakami; Writing by Yuka Obayashi; Editing by Muralikumar Anantharaman and Richard Pullin)

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