Russia Seizes Control of Sakhalin Gas Project, Raises Stakes with West

Russian LNG production from projects such as Sakhalin-2 was likely to suffer as a results, said Saul Kavonic, head of Integrated Energy and Resources Research at Credit Suisse. “This will tighten the LNG market materially this decade,” he added.

Yuka Obayashi, Emily Chow and Ron Bousso, Reuters

President Vladimir Putin has raised the stakes in an economic war with the West and its allies with a decree that seizes full control of the Sakhalin-2 gas and oil project in Russia’s far east, a move that could force out Shell and Japanese investors.

The order, signed on June 30, creates a new firm to take over all rights and obligations of Sakhalin Energy Investment Co., in which Shell Plc and two Japanese trading companies Mitsui and Mitsubishi hold just under 50%.

The five-page decree, which follows Western sanctions imposed on Moscow over its invasion of Ukraine, indicates the Kremlin will now decide whether the foreign partners can stay.

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