TOKYO, July 1, 2022 (AFP) - Japan's energy "interests must not be 
undermined", Tokyo said Friday, after Moscow issued a decree transferring 
operations of a key oil and gas project to a new Russian company.

Japanese trading houses Mitsui and Mitsubishi Corp own 12.5 and 10 percent 
stakes respectively in the Sakhalin-2 project, but the future of their 
investments appears uncertain after the Russian move.

The decree calls for the establishment of a new Russian operator and requires 
existing foreign shareholders to apply for the right to participate in the 
new firm, with Moscow deciding on their inclusion.

Japanese government spokesman Seiji Kihara said Friday morning that Tokyo was 
"closely examining the impact on liquified natural gas (LNG) imports".

"Speaking generally, we believe our resource interests must not be 
undermined," he added, declining to give further comment.

Later Friday, Prime Minister Fumio Kishida said the government did not think 
the decree "will immediately stop LNG imports," on which Japan is heavily 
dependent.

"We think we need to carefully monitor how the decree will affect our 
contract," he told reporters.
Japan's economy minister meanwhile said Tokyo would look into alternative 
suppliers.

"In the mid-to-long term, we will do everything we can to ensure a stable 
supply of energy, including through alternative procurement from LNG 
suppliers other than Russia, buying from the spot market, and reducing demand 
when necessary," Koichi Hagiuda told journalists.

He said Japan would also look into boosting renewable and nuclear energy, 
which remains controversial in the country after the 2011 Fukushima disaster.

The Russian decree says the move is a reaction to the "unfriendly actions" of 
countries that are imposing "restrictive measures" on Russia over its 
invasion of Ukraine.

It warns the Russian government will carry out a "financial, environmental 
and technical audit" of foreign stakeholders and identify any "damages" they 
have caused.

Those accused of such damages may be obliged to pay unspecified compensation, 
it adds.

Energy resource-poor Japan relies heavily on LNG imports and had previously 
ruled out withdrawal from the Sakhalin-2 project despite joining Western-led 
energy sanctions on Russia over the invasion of Ukraine.

Spokesmen for Mitsubishi and Mitsui would say only that the firms were 
examining the details of the decree in coordination with the government.

The other major stakeholder in the project is oil giant Shell, which has 
already committed to selling its 27.5 percent stake.

"As a shareholder, Shell has always acted in the best interests of Sakhalin-2 
and in accordance with all applicable legal requirements," the British group 
said Friday. 

"We are aware of the decree and are assessing its implications," it added.

Shell in May announced it had taken a hit totalling $1.6 billion linked to 
Sakhalin-2.

Japan is heavily dependent on imported fossil fuels, in part because many of 
its nuclear reactors have been offline since the Fukushima disaster.

Russia supplies nearly nine percent of Japan's LNG demands, with Australian 
exports accounting for about 40 percent of the market.

Japan is currently sweltering through a record heatwave and the government 
has warned several times in recent days of a power crunch in the Tokyo 
region.

On Friday, it began a three-month period in which it is asking residents to 
conserve power, with fears of shortages during the summer heat.