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FSUOGM: Russia sets up new entity to manage Sakhalin-2

The Russian state-owned entity has assumed full control over the Sakhalin-2 LNG terminal in the Far East, after the Russian government previously accused the project’s foreign partners of violating their shareholder obligations.

Operated by Gazprom, the Sakhalin-2 LNG and oil project also involves Shell, which announced earlier this year it would withdraw from Russia in response to Moscow’s invasion of Ukraine. The project’s other foreign participants are Japan’s Mitsui and Mitsubishi, but the Japanese government has urged the pair to retain their interests, because of concerns about Japan’s energy security.

The Sakhalin Energy Investment consortium has been replaced as project operator by Sakhaklinskaya Energia, the latter entity said on August 19. Its priority will be to “ensure continuous and reliable production [of hydrocarbons] and the fulfilment of all existing obligations [to contractors and customers].” Sakhalinskaya Energia was incorporated on August 5, under a Kremlin decree, as a limited liability company with a charter capital of just RUB10,000 ($167). But the operator said it had “a high reserve of cash [at bank accounts] to continue the fulfilment of all of its financial obligations.”

The Russian government previously said that foreign shareholders would have until early September to assume interests in the new operator. Gazprom will have just over a 50% interest in the company, as it did in Sakhalin Energy Investment. Shell owned a 27.5% stake in the previous operating company, while Mitsuibishi and Mitsui held a combined share of 22.5%.

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