Mitsui and Mitsubishi in the Sakhalin-2 project, and Itochu and Marubeni in Sakhalin-1

13.03.2022       

Despite Shell shutting down its LNG plant, Japanese trading houses Mitsui & Co. and Mitsubishi Corp. remain in the Sakhalin-2 project. The project is the source of almost 10% of Japan's imported liquefied natural gas. "The position of Japan in relation to its interests on Sakhalin is very different from the position of Europe and the United States", — said the head of the energy department of one of the trading houses to high-ranking officials of the Ministry of Economy, Trade and Industry. The submitted document contained statements such as: "A hasty withdrawal of troops is dangerous." Ministry officials responded by saying that & laquo;interests are very important».

«Sakhalin-2» — Russia's first LNG project. At Gazprom about 50% shares of Shell about 27.5%, Mitsui 12.5% ​​and Mitsubishi 10%. Starting shipping in 2009, of the 10 million tons produced annually, about 60% comes from Japan, which accounts for almost all LNG imports from Russia. LNG from Sakhalin-2 is supplied to Japanese electricity and gas companies. Long-term contracts stabilize volumes and costs, while delivery takes about three days, which is shorter than the two-week period from the Middle East. Japanese companies have integrated gas into their supply chains, making it far more important to them than to Shell, which sells most of its assets in Asia. The government and trading companies analyzed the risks associated with withdrawing from the project. The spot market will have to fill this gap, which will lead to additional costs for the population of almost $20 billion.

Similarly with Sakhalin-1; - a crude oil development project involving the ministry, as well as Japanese trading companies such as Itochu and Marubeni. To the share of "Sakhalin-1" accounts for about 40% of Russian crude oil imports, accounting for 3.6% of Japan's total crude oil imports. After Japan abandons these projects, it will not be easy to return them. Consequently, leaving Sakhalin is not currently an option for the government or trading companies. Japan is closely following developments in the European Union, which depends on Russia for just under 30% of its crude oil and 45% of its natural gas.

Source: Nikkei