Japan seeks guarantees of oil and gas supplies from Sakhalin II
Japan wants guarantees that it will receive oil and gas from the $22 bln Sakhalin II project in Russia's Far East on schedule, in view of Gazprom's slated involvement, the minister of economy, trade and industry said Tuesday according to RIA Novosti.
Russia's state-run energy giant Gazprom is widely expected to gain control over the vast oil and gas project, following an agreement with Royal Dutch Shell, which currently holds a controlling stake.
Akira Amari told journalists after a cabinet meeting, "In view of Gazprom's intention to gain a stake in the project, fears have arisen among Japanese business circles on the stability of supplies. It is therefore of the utmost importance that Japanese producers of electricity, and oil and gas companies, are given guarantees that the schedule will remain unchanged."
Under the original agreement, Japan is to start receiving oil and gas from Sakhalin II in 2008.
Shell holds 55% in project operator Sakhalin Energy, Japan's Mitsui controls 25%, and Mitsubishi 20%. Much of the hydrocarbons from the project is set to be exported to Japan, which is seeking to diversify its energy import sources.
A Gazprom spokesman said Monday that Gazprom CEO Alexei Miller had held a working meeting with Shell CEO Jeroen van der Veer on Friday, at which the Shell chief made proposals on Gazprom's involvement in the project. The spokesman declined to give details, but said the company was analyzing the offer.
Sakhalin Energy, controlled by Shell, has been under scrutiny since September, when the Natural Resources Ministry canceled its 2003 approval of Sakhalin II.
The production-sharing agreement behind the project signed in 1994, which allows the operator to comfortably recoup expenses before sharing its profits with the state, is also hugely unpopular with the Russian government.
Shell's doubling of its cost estimate to $22 billion, which threatened to delay the date by which the Russian government was to benefit from the project, infuriated Russian authorities and scuppered a previous agreement on an asset swap, which would have given Gazprom a 25% stake in Sakhalin II.
Analysts now expect the energy giant to gain a controlling stake in the project, a part of which would have to come at the expense of the Japanese firms' involvement.