31 Aug 2022 17:27

Mitsubishi decides on heels of Mitsui to stay in Sakhalin-2, Russia approves its participation in new operator

MOSCOW. Aug 31 (Interfax) - The Russian government has approved Japanese company Mitsubishi's participation in the new Russian operator for the Sakhalin-2 project.

Russian Prime Minister Mikhail Mishustin's August 31 decree has been published on the official Internet portal for legal information. Information was disclosed on Mitsui taking similar steps on August 30.

According to the decree, Mitsubishi Corporation has given notice of its consent to take over a 10% stake in Russia's Sakhalin Energy LLC proportionate to its stake in the former operator, Bermuda's Sakhalin Energy Investment Company Ltd.

The immediate owner of the stake will be DGS Japan Co., Ltd., a wholly-owned subsidiary of Mitsubishi Corp. Mitsubishi's stake in Sakhalin Energy was formalized through Diamond Gas Sakhalin B.V. of the Netherlands.

According to the decree, Sakhalin Energy LLC will prepare the necessary documents to transfer the designated stake in charter capital to DGS Japan Co., Ltd.

Russian President Vladimir Putin signed a decree in June on "special economic measures in the fuel and energy sector in connection with the unfriendly actions of certain foreign nations and international organizations." Under the decree, the operator of Sakhalin-2, Bermuda-based Sakhalin Energy Investment Company Ltd was replaced by a Russian company. The new operator was registered and began operating in August.

"We're continuing to work to realize our intentions to exit Sakhalin Energy Investment Company in line with current legislation and existing agreements. As the head of Shell (SPB: RDS.A), Ben van Beurden, said when announcing the results for the second quarter on July 28: It's highly unlikely that we will become a member of a Russian legal entity to which our share in Sakhalin Energy may be transferred. Of course, it creates a little bit more uncertainty about how exactly we will exit, but we are pretty clear on our intent, and acquiring a stake in the Russian company is not in line with our intentions," a spokesperson for Shell told Interfax on Tuesday in connection with the publication of the Russian government document on Mitsui's participation in the project.

If the stake is not claimed by the foreign partner, it is subject to appraisal and sale by the government to a Russian legal entity. The B1 - Consult company, previously Ernst & Young, EY, was named as the appraiser of the shares in the LLC. Foreigners can receive funds for their stake only after determination and offsetting of compensation for any damages incurred by them in the course of the project.