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1 Jul, 2022 12:04

Kremlin reacts to gas project 'nationalization' claims

President Putin ordered a domestic company to take ownership of Sakhalin 2 on Thursday
Kremlin reacts to gas project 'nationalization' claims

The change in ownership of the Sakhalin-2 oil and gas project in Russia’s Far East should not be viewed as nationalization, Kremlin spokesman Dmitry Peskov said on Friday.

On Thursday, Russian President Vladimir Putin signed a decree ordering the creation of a firm to take over all rights and obligations of the Sakhalin Energy Investment Company. The document indicates that it is up to Moscow to decide whether foreign shareholders are to remain in the enterprise.

Asked whether other projects involving Western corporations in Russia would follow suit, Peskov responded that each situation will be reviewed on a case-by-case basis.

The Kremlin spokesman added that the government sees no reason for the supply of liquefied natural gas (LNG) from Sakhalin-2 to stop after the measure is implemented.

Major shareholders of the Sakhalin-2 oil and gas project include Russian energy giant Gazprom, which holds 50% plus one share. Foreign firms include Britain’s Shell, which owns 27.5% minus one share, and Japan’s Mitsui & and Mitsubishi, with 12.5% and 10% respectively.

Shell is currently evaluating the requirements set out by the Russian authorities, a company spokesperson told TASS news agency. In May, Reuters reported that the UK company was in talks with a consortium of Indian energy firms to sell its stake in Sakhalin-2.

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