Japan to retain stake in Russia’s Sakhalin 1 oil project, despite sanctions over invasion of Ukraine

Japanese stakeholders in the Sakhalin 1 oil and gas project in eastern Russia will retain their stake in the undertaking by joining a new Russian operator recently established under a decree, the industry minister said on Friday, as the project remains a vital source of energy for resource-poor Japan.

Japan’s government and companies, including major trading houses Itochu and Marubeni, have invested in the project through Tokyo-based Sakhalin Oil and Gas Development. If the Russian side approves the company plan decided at Friday’s shareholders meeting, Japan will be able to keep its stake in the project.

The move comes amid international sanctions on Russia over its invasion of Ukraine.

“While Japan is reliant on the Middle East for over 90 per cent of its crude oil imports, Sakhalin 1 is an extremely important project as an alternative source outside the Middle East,” Economy, Trade and Industry Minister Yasutoshi Nishimura told reporters.

Sakhalin Oil and Gas Development held a 30 per cent stake in the project, which started producing crude oil on the island of Sakhalin, north of Japan, in 2005. Under the decree signed by President Vladimir Putin, foreign business partners had one month from the launch of the new operator in October to decide whether to invest in the new company.