After a media report showed that Russian President Vladimir Putin had issued an order about a new company taking over the assets of the operator of the Sakhalin II liquified natural gas project.
Prime Minister Fumio Kishida said he did not believe that the order will lead to an immediate stop of LNG shipments while he was on the campaign trail in Okinawa Prefecture. Asked about the report that Putin had signed the order, Deputy Chief Cabinet Secretary Seiji Kihara said at his July 1 news conference that it was unacceptable to have rights related to our nation's natural resources hindered. He said that the government was looking into how the order would affect the stakes of the affected Japanese trading companies and LNG imports.
Two Japanese trading companies have stakes in the project. Japan relies on Russia for 8.8 percent of its LNG imports, with much of it coming from the Sakhalin II project.
After the assets of the project operator, Sakhalin Energy Investment Co. are transferred to a new Russian company, the announcement was vague.
There is the possibility that the presidential order could lead to the seizure of the project by Russia.
The measure is being viewed as a retaliatory move against Japan for going along with Western nations in implementing various sanctions against Russia after its invasion of Ukraine.
After the Russian invasion, Shell Plc of Britain pulled out of the Sakhalin II project.
Mitsui Co. holds a 12.5 percent stake, while Mitsubishi Corp. has a 10 percent stake.
Officials of the economy ministry, who oversees energy policy, were trying to determine what the presidential order might mean for Japan's energy supply.
A number of electric power and gas companies supply their LNG from the Sakhalin II project, with Hiroshima Gas Co. procuring half of its LNG from the venture.
The companies that were trying to determine if the order means they will not be receiving LNG shipments in the future were a concern for those companies on July 1st, but they were not responding to that on July 1.
Japan has taken a similar step regarding LNG because there are few alternatives for any of the other Group of Seven nations in agreeing to gradually stop imports of Russian coal and petroleum.