MOSCOW, November 26 – RIA Novosti. No exception in the marginal price mechanism for Russian oil and petroleum products for Sakhalin-1 was almost certainly the choice of Japan, which participated in the project through Sodeco, Deputy Head of Energy and Finance Institute. (IEF) Alexei commented on RIA Novosti Belogoriev.

The previous day, the Japanese Economy Minister said that the price restrictions on the import of Russian oil, which the G7 and the European Union are planning to introduce in December, will also apply to the Sakhalin-1 project. At the same time, the US Treasury, in its statements on the price cap mechanism until September 30, 2023, excluded the supply from Sakhalin-2 fields, provided that all of them are imported by Japan.

“The US decision to limit oil exports from Sakhalin projects has been openly agreed with Japan. So it is almost certainly the choice of the Japanese side to not make an exception for Sakhalin-1. The difference in approaches is most likely due to the crisis. There in April-October of this year due to sabotage of its work by ExxonMobil The situation of the developing Sakhalin-1 project itself. 1″ Presumably, the Japanese government assumes that problems will partially continue in 2023,” said the analyst.

Sakhalin-1 operator Exxon Neftegaz Limited, which owns a 30% stake, announced its intention to withdraw from the project in March and introduced a force majeure regime in April, eventually stopping gas and oil production as well as export shipments. In autumn October, Russian President Vladimir Putin ordered the transfer of Sakhalin-1 to Russian jurisdiction and temporarily transferring control of the new operator to the Rosneft (20%) structure. Japanese Sodeco (30%) and Indian ONGC (20%) remained in the project, while American ExxonMobil is in the process of exiting.

WHY DO THE JAPANESE STAY

At the same time, Belogoryev recalled that Japan itself sharply reduced its oil purchases from Russia: in June, September and October, imports were not made at all. In total, it decreased by 40.5% compared to the results of January-October 2022. “Given that the slackening of Sakhalin-2 is also valid only until September 2023, Japan clearly believes that it will not need deliveries from Sakhalin-1 during this period,” the analyst said.

However, he added that the weak current interest does not mean that Japanese Sodeco is ready or, moreover, intends to leave the project. According to Belogoryev, the Japanese government is moving from a clearly defined and repeatedly stated environment that the country’s companies should maintain their presence on Sakhalin as long as possible.

According to the analyst, there are three reasons for this. Firstly, the life cycle of Sakhalin projects is calculated in decades, not one or two years, and participation in them is considered by Tokyo as a strategically important and long-term profitable investment, and this is also true for ONGC, India. Second, Japan, “highly prone to economic nationalism,” may view Sakhalin Island as a historically dependent territory. Third, Japanese politicians may fear that Chinese companies will quickly replace them.

Still, Belogoryev added that Russia as a whole would not be more affected by oil exports, as the Sakhalin-1 project itself is no exception to the “price ceiling”. “It’s even weaker, because the port of De-Kastri is conveniently located geographically, and so its exports are unlikely to suffer noticeably.”