25 May 2022 14:41

Duma speaker calls for reconsidering agreement with foreign investors in Sakhalin-2

MOSCOW. May 25 (Interfax) - State Duma Speaker Vyacheslav Volodin has proposed reconsidering the production sharing agreement for the Sakhalin-2 project and transferring the shares of foreign investors from unfriendly countries to the state or Gazprom .

"We're talking about the Sakhalin-2 production sharing agreement where Japan participates, England and the Netherlands participate. On the one hand, they malign our country, on the other, they sit there quietly and receive big dividends up to present. Maybe we need to analyze the situation. Let Gazprom's share grow instead, that of our state, or companies friendly to Russia will come, and these companies will leave," Volodin said during a plenary meeting of the State Duma at which a report from the Accounts Chamber was heard.

Volodin asked Accounts Chamber head Alexei Kudrin what he thinks of the idea and whether the supervisory authority should react and introduce proposals to defend domestic interests.

Sanctions are, as a rule, adopted by politicians and government bodies, and companies and the private sector suffer from them, Kudrin said. He proposed separating measures taken by the state and the private sector. "Russia will nevertheless widely interact with other countries, not just with unfriendly ones, but with others that are today ready to interact with us. They shouldn't have a feeling that there are political risks to making decisions about our companies," Kudrin said.

"Measures in relation to foreign companies should be level-headed and very deliberate. In some cases I agree that such measures are required. I repeat that in this instance, let's analyze it. We as the Accounts Chamber are prepared to do that," he said.

"We should study all this. We hope that the Accounts Chamber will express its point of view, in this case on the Sakhalin-2 PSA, because in this case, we will have more funds coming into the Russian budget, Sakhalin, the Far East, and of course, assets will return. They're silent right now? Why are they silent? Because this is an extremely lucrative project. You'd expect Japan to say okay, now we've gone to the extent of sanctions, we'll give you the [Sakhalin-2] stake back. But as it is, they introduce sanctions and receive a profit. England, the Netherlands. Shell (SPB: RDS.A) has declared that it's leaving Russia, loudly slamming the door, but they have a stake in Sakhalin-2. Get up and go then, give everything to Gazprom, and Gazprom is a part of the public wealth, or to the Russian government - it will be a direct asset," Volodin said.

Sakhalin-2 is developing the Piltun-Astokhskoye and Lunskoye fields on the Sakhalin shelf. Sakhalin Energy, registered in Bermuda, is the operator of the project. Its shareholders are Gazprom with 50% plus one share, Shell with 27.5% minus one share, Mitsui with 12.5%, and Mitsubishi with 10%.

Shell, which owns 27.5% of the project, said at the end of February that it was planning to leave the asset and later withdrew its managing and technical staff. The company recognized impairments of $1.614 billion related to Sakhalin-2 in its report for the first quarter of 2022. Japan's Mitsui, whose stake in Sakhalin-2 is 12.5%, and Mitsubishi, which holds 10%, do not plan to leave the project, where roughly 4 million tonnes of oil are produced per year.