Sakhalin-2 New Entity 50% Owned by Gazprom

Russia has ordered the establishment of a new operator of the Sakhalin-2 LNG project based on new documents out yesterday.

• The new operator, Sakhalinskaya Energija, will be 50% owned by Gazprom.
• Putin had sent a decree last month requiring a transfer of the project operator from Bermuda to Russia, throwing doubt over Shell and Japan’s Mitsubishi and Mitsui’s ownership stakes.
• Interfax has reported if the stakes are not claimed by foreign partners (Shell, Mitsubishi and Mitsui), they will be sold by the Russian government to a Russian entity.
• Shell holds a 27.5% stake in the project which they intend to offload if possible. Mitsubishi and Mitsui own a combined 22.5% and are still open to working with the project citing Japan’s energy security given its reliance on LNG from the project.
• Mitsui and Mitsubishi cut the value of their stakes in the Sakhalin-2 LNG project on Tuesday by 217.7 billion yen ($1.62 billion) after Moscow's move to seize control of it.