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    Mitsui, Mitsubishi trim value of their stakes in Sakhalin 2

Summary

The companies conducted a reassessment based on the uncertainty surrounding the project.

by: Shardul Sharma

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Complimentary, Natural Gas & LNG News, Asia/Oceania, Liquefied Natural Gas (LNG), Security of Supply, Corporate, Investments, News By Country, Japan

Mitsui, Mitsubishi trim value of their stakes in Sakhalin 2

Japan’s Mitsui and Mitsubishi Corp on August 2 slashed the value of their stakes in the Sakhalin 2 LNG and oil project in Russia owing to business uncertainty.

Mitsui cut the fair value of its stake in the project by 136.6bn yen ($1.03bn). The company said it conducted a reassessment based on the uncertainty surrounding the project. The balance of investments, loans and guarantees also decreased to 271.8bn yen as a net position after deducting provision on guarantees.

“We will continue to take appropriate action while discussing with relevant stakeholders including the Japanese government and business partners in respect of Sakhalin 2 and Arctic LNG 2 projects,” Mitsui said.

Mitsubishi reduced the value of its stake by 81.1bn yen. The company said it is currently corresponding through consultation with the Japanese government and the project partners, and “there is a possibility that the fair value may increase or decrease depending on the circumstances evolve”.

Both Mitsui and Mitsubishi said there would be no effect on their profit or loss. As of June 30, Mitsui's investment balance stood at 90.2bn yen, while that of Mitsubishi was 62.2bn yen. 

Gazprom owns a 50% plus one share in Sakhalin Energy, the project's operator, while Shell has a 27.5% stake, and Mitsui and Mitsubishi have shares of 12.5% and 10% respectively.

Russia in June seized control of the Sakhalin-2 project under a Kremlin decree. The Russian government will establish a limited liability company that will take over the rights and obligations of Sakhalin Energy.