by Yuka Obayashi, Emily Chow and Ron Bousso
TOKYO/LONDON (Reuters) – Vladimir Putin is upping the ante in the economic war pitting him against Westerners and their allies by signing a decree allowing him to take full control of the Sakhalin-2 gas and oil project in the Far Russian East, a measure that could force Shell and Japanese investors to withdraw.
The decree, signed on Thursday, creates a new company to take over the rights and obligations of the Sakhalin Energy Investment Co, in which Shell and two Japanese trading companies Mitsui & Co and Mitsubishi Corp hold just under 50%.
The Kremlin now has the prerogative to decide whether or not to maintain foreign partners.
State-owned Gazprom already owns a 50% stake, plus one share, in Sakhalin-2, which accounts for around 4% of global liquefied natural gas (LNG) production.
The move risks destabilizing the LNG market and complicating the situation for many Western companies, although Moscow has said it sees no reason to stop deliveries from Sakhalin-2.
“The Russian decree expropriates foreign holdings in the Sakhalin Energy Investment Company, marking a further escalation in current tensions,” said Lucy Cullen, senior analyst at consultancy Wood Mackenzie.
Gazprom, Sakhalin Energy and the Russian Energy Ministry did not respond to requests for comment.
(Reporting Yuka Obayashi, Sakura Murakami, Ju-min Park, Kiyoshi Takenaka in Tokyo, Ron Bousso in London, Emily Chow in Kuala Lumpur, Muyu Xu in Singapore; Written by Chang-Ran Kim and Edmund Blair; French version Alizée Degorce, edited by Sophie Louet)
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