Japanese Companies Expected to Sign Sakhalin-2 Contracts

Japanese energy companies involved with Sakhalin-2 are expected to sign new contracts according to Asahi newspaper.

• Prices and gas volumes for contracts remain unchanged according to reports this week.
• There was an opportunity to add additional terms that would have been unfavorable for the Japanese parties, but in the end the content of the contracts will remain unchanged, Asahi has reported.
• Current Sakhalin Energy shareholders have a month to agree to receive stakes in the new Russian operator of the project, which is being carried out under a production sharing agreement.
• If a foreign partner declines a stake, it will be appraised and sold by the government to a Russian legal entity.
• Updated terms reported this week include payments now being required to go through Gazprombank which Japanese companies are now checking to see if it breaches sanctions.
• Putin announced a decree for Sakhalin-2 in June switching the project ownership from Bermuda based to Russian based leaving the new operator terms under uncertainty.
• Japanese companies Mitsui and Mitsubishi have stakes in the project.