The Russian government has approved applications from Japan’s Sodeco consortium and India’s ONGC Videsh to regain their respective stakes in the Sakhalin-1 oil and gas development near Sakhalin Island in the country’s far eastern region.
According to resolutions signed by Russian Prime Minister Mikhail Mishustin and published on Monday, Sodeco will have a 30% share in the newly formed project operator, Russian registered Sakhalin-1 LLC, while ONGC Videsh will hold a 20% interest.
“The decision is very significant for stable energy supplies to our country over the medium to long term,” Japan’s Chief Cabinet Secretary Hirokazu Matsuno told a news conference in Tokyo on Tuesday, according to news agency Jiji Press.
Russian President Vladimir Putin had earlier ordered the confiscation of assets and contractual obligations of Sakhalin 1 operator Exxon Neftegaz, led by US major ExxonMobil, and passed them on to the new entity, in which Russia’s largest oil producer, Rosneft, will hold 20% interest through two of its subsidiaries.
ExxonMobil indicated it would not apply to the Kremlin to regain its stake.
Mishustin’s resolution requires Sodeco and ONGC Videsh to transfer their share of accumulated revenues from the project to a designated account with an authorised bank as a prerequisite to have their shareholdings fully reinstated.
Earlier in November, Mishustin signed another resolution authorising Gazprombank to handle Sakhalin 1-related financial transactions.
International sanctions approved shortly after Russia invaded Ukraine in February have significantly curtailed the ability of foreign companies to repatriate their earnings from Russian projects.
According to Putin’s October decree, revenues deposited by the Sakhalin 1 shareholders are to be spent for the project’s needs as per terms of the Sakhalin 1 production sharing agreement signed in 1995.
Exxon Neftegaz had to curtail oil production at Sakhalin 1 to almost nothing by end of May after international sanctions led western insurers to cease providing cargo and voyage coverage to a fleet of ice-class tankers operated by Russian state shipper Sovcomflot.
Loading of the Sakhalin 1 oil blend, known as Sokol, is expected to resume before the end of November, local reports suggested, with India Oil Corporation identified as one of the first buyers.
A Sovcomflot-operated crude oil tanker was moored at a single-point mooring offshore terminal near the port of De-Kastri this week, according to marine traffic tracking services.
A dedicated 220-kilometre pipeline carries Sakhalin 1 oil to De-Kastri in Russia’s Khabarovsk region. The pipeline will also be used by privately owned producer NNK-Sakhalinmorneftegaz to ship output from its onshore oilfields on the island.
The government has four months to arrange an auction for the 30% stake in Sakhalin 1 that was not claimed back by ExxonMobil. ONGC Videsh, Sodeco and Rosneft have not publicly indicated intentions to increase their stakes in the project.