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1 Mar 2022

Kyodo News

Russia: Japanese trading houses Mitsui and Mitsubishi to assess impact of Shell's Russian gas project exit

"Japan trading houses study impact of Shell's Russian gas project exit" 1 March 2022

Major Japanese trading houses Mitsui & Co. and Mitsubishi Corp. said Tuesday they will consult with the government to assess Shell PLC's planned exit from its flagship oil and natural gas business in eastern Russia.

The British oil major said Monday it is exiting Sakhalin 2, its joint venture with Russian energy company Gazprom and a massive oil and gas project located on Sakhalin island, following Russia's invasion of Ukraine.

Shell has a 27. 5 percent stake in the project, while Mitsui and Mitsubishi hold 12.5 percent and 10 percent, respectively.

The project has been one of the main sources of natural gas supply to Japan. It can produce 9.6 million tons of liquefied natural gas annually, and about 60 percent of its production is shipped to Japan, according to Mitsubishi's website.

The Japanese companies said they will analyse details of Shell's decision and consider how to handle the situation with the government and related parties.

Shell's move comes as the United States and its allies step up economic sanctions against Russia for its invasion of Ukraine. Another British energy giant, BP PLC, said Sunday it would sell its stake in Russian oil company Rosneft.

"We are shocked by the loss of life in Ukraine, which we deplore, resulting from a senseless act of military aggression which threatens European security," Shell's chief executive Ben van Beurden said in a statement.

Shell said it is also pulling out of its other Russian businesses, including the Nord Stream 2 project, a pipeline built to send Russia's natural gas to Germany.