Japan gas, electric utilities to buy Sakhalin-2 contract

Some companies said on Wednesday that TOKYO Japanese gas and electric utilities with long-term contracts to buy liquefied natural gas LNG from the Sakhalin-2 project in Russia have received a new contract from the newly-formed Russian operator.

The Russian entity was registered on Aug. 5 to replace Sakhalin Energy as Moscow rewrites rules for foreign firms operating in the country amid global sanctions after it invaded Ukraine.

For resource-poor Japan, the project is an important source of energy security. It buys about 9 percent of its LNG from Russia, mainly from Sakhalin-2.

He said we are looking at details of the contract to decide whether or not we will sign it. Saibu buys 65,000 tons of LNG each year from Sakhalin -- 2 and has already received the cargo for this year in July.

Tohoku Electric Power got a new contract from the new entity, while Kyushu Electric Power received a notification on Aug. 10, according to their spokespersons, who said they are considering whether to continue their contracts.

Tokyo Gas, Japan's biggest city gas supplier, has been contacted by the new entity about a contract, but they won't say anything about it due to confidentiality.

Other buyers JERA, Toho Gas and Hiroshima Gas didn't want to say anything.

A Russian government decree signed in early August gave foreign investors in the project -- Shell and Japanese trading houses Mitsui Co and Mitsubishi Corp -- a month to claim their stakes in the new entity, meaning the deadline is Sept. 4.

The Japanese government has repeatedly said it wants the trading houses to retain their stakes, and has asked Mitsui and Mitsubishi to think positively in joining the new Russian entity.

On Wednesday, new industry minister Yasutoshi Nishimura met Mitsubishi President Katsuya Nakanishi and asked him to consider involvement in the new Russian company.

Nishimura told reporters that they had not heard of any new conditions that would make signing a contract for Sakhalin-2 project a difficulty.

After the meeting, a spokesman said Mitsubishi will look at the issue from a holistic perspective, pointing to the government's request, business risk and economic rationality.