Russian dictator Vladimir Putin signed a decree transferring the property of the Sakhalin-2 oil and gas project to state ownership. Instead of the Bermudian company Sakhalin Energy Investment Company Ltd. a new Russian LLC will become its operator, Kommersant writes.
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Foreign shareholders of Sakhalin Energy – Shell, Mitsui and Mitsubishi – are offered a choice: to receive shares in the new company or cash compensation, which will actually be frozen in a bank account in Russia.
“In other words, the Russian authorities are forcing foreign companies to agree to the proposed conditions for maintaining their participation in Sakhalin-2, otherwise foreign shareholders risk simply losing their stake,” the publication says.
Shell announced at the end of February refusal of joint projects with Gazprom and began looking for buyers for a 27.5% stake in Sakhalin-2. In April, it was reported that Chinese state-owned companies Cnooc, CNPC and Sinopec were in talks to acquire Shell’s stake.
Sakhalin-2 – a project on Sakhalin Island, implemented under the terms of a production sharing agreement. About 60% of liquefied gas is destined for Japan, among the shareholders of the project operator Sakhalin Energy are two Japanese companies, Mitsui and Mitsubishi, with a total share of 22.5% and Shell with a 27.5% share. The largest shareholder is Gazprom (50% + 1 share).
As for Japanese companies, they did not plan to withdraw from Sakhalin-2, because it provides up to 8% of Japan’s demand for liquefied gas.
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