Russian President Vladimir Putin has signed a presidential decree to transfer the operating body of the Far East oil and gas development project “Sakhalin 1” to a new legal entity established by the country.
The newly formed Russian entity will take over the rights and responsibilities of Sakhalin-1 from the current operator Exxon Neftegaz and the investment consortium, according to a notice Wednesday.
Foreign interest holders must inform the Russian side within a month whether they will continue to invest in the new company. If it chooses to withdraw, it will be eligible for compensation adjusted for possible losses from the suspension of Sakhalin-1 production earlier this year, the people said.
Economy, Trade and Industry Minister Yasutoshi Nishimura explained on NHK’s discussion program on the 9th that since crude oil imports from Sakhalin 1 have already dropped to zero, “Japan’s stable supply of crude oil will not be disrupted.” On the other hand, since regarding 90% of Japan’s crude oil imports are dependent on the Middle East, Sakhalin 1 is a “very important project from the perspective of diversification” of import destinations, confirming the Russian side’s intentions and circumstances. In the meantime, we will consider specific measures.
Exxon Neftegaz Sakhalin 1 facility (September 20, 2005)
Photographer:Hector Forster/Bloomberg News
In addition to ExxonMobil, Sakhalin 1 is funded by Rosneft, Sakhalin Oil and Gas Development (SODECO = Ministry of Economy, Trade and Industry, Itochu, Petroleum Exploration, Marubeni, INPEX), and India Oil and Natural Gas Corporation. Exxon announced in August that it was in talks to transfer its 30% stake to a third party. Banned withdrawal until the end of the year.
Putin signed a similar decree in July transferring ownership of another project, Sakhalin-2, to a newly formed Russian company.
news-rsf-original-reference paywall">Original title:Putin Orders Sakhalin-1 Project Transferred to Russian Entity(excerpt)
(Added comment by Minister of Economy, Trade and Industry Nishimura in the 4th paragraph)