Russia has decided to let Japanese firms keep their stake in the Sakhalin-1 oil project in Russia’s Far East as Moscow reshuffles ownership of domestic oil and gas projects after a mass exodus of Western firms following the Russian invasion of Ukraine.   

“The decision is very significant for stable energy supplies to our country over the medium to long term,” Japan’s Chief Cabinet Secretary Hirokazu Matsuno said on Tuesday, as quoted by Japan Times.

Early this month, the Japanese government asked the Japanese companies that participated in the original consortium to retain their stakes in the new entity that will operate the project.

Russian President Vladimir Putin signed a decree to change the ownership of Sakhalin-1 last month, with the state setting up a new entity to manage the project. Previous shareholders such as Japan’s SODECO consortium were offered the chance to retain their stakes.

SODECO, or Sakhalin Oil and Gas Development Co, comprises Itochu, the conglomerate, Marubeni, and Japan Petroleum Exploration Co. The Japanese government has a 50-percent stake in the consortium.

“The Sakhalin-1 is extremely important for Japan’s energy security as it is a valuable source outside of the Middle East,” said trade minister Yasutoshi Nishimura in early November, as quoted by Reuters.

The Russian government authorized on Monday a transfer of a 20% stake in the new Sakhalin-1 operator to India’s ONGC Videsh Limited and 30% to SODECO, Russian news agency TASS reported.

Previously, the Sakhalin-1 oil project was operated by ExxonMobil but Russia removed the U.S. supermajor from the operatorship position earlier this year, amid the company’s own total pullout from Russia.

Exxon had a 30-percent stake in Sakhalin-1 but in October Putin signed a decree with which a new entity was set up to manage the operations of the Far East oil and gas project. The decree allowed the Russian government to distribute the stakes in the project and kick out foreign partners if they saw fit.

Exxon was on its way out anyway, however. Shortly after Russian troops entered Ukraine in February, Exxon said it was going to pull out from Russia and make no more investments there.  

By Tsvetana Paraskova for Oilprice.com

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