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Japan’s energy security could be undermined as the U.S. imposed on Thursday fresh sanctions on Russia’s Arctic LNG 2 project, which is close to first production.
The Arctic LNG 2 project was developed by Russia’s largest independent natural gas producer, Novatek, and was on track to begin first production later this year.
Novatek holds a 60% stake in Arctic LNG 2. The other shareholders include CNOOC of China and China National Petroleum Corporation (CNPC), French supermajor TotalEnergies, and Japanese firms Mitsui Group and Jogmec.
Japan is part of the G7 group that has imposed the price cap on Russian oil and has banned imports of Russian coal, but it has so far drawn the line at natural gas, which it needs.
In September, the U.S. levied some sanctions on the Arctic LNG 2 project, designating Russian services companies connected with its development.
On Thursday, the U.S. Department of State designated limited liability company ARCTIC LNG 2, the operator of the Arctic LNG 2 Project, as part of additional sanctions against Russia “to further target individuals and entities associated with Russia’s war effort and other malign activities.”
Commenting on the latest sanctions move, Japan’s Mitsui said on Friday,
“While we will closely examine the impact of Arctic 2 being sanctioned, we will take appropriate measures observing the rights and obligations of J-Arc and Mitsui, under various agreements including the shareholders agreement.”
“We will comply with laws and regulations, including sanctions taken by the international community, and will take appropriate measures in cooperation with stakeholders including the Japanese government,” the company said.
Western customers of Arctic LNG 2 could be granted exemptions and could still import LNG from the Russian project, Kaushal Ramesh, vice president of LNG and power markets research at Rystad Energy, told Bloomberg.
In July this year, Mitsui said it doesn’t plan to exit its minority shareholding in the Sakhalin-2 LNG project as the export facility continues to export liquefied natural gas to Japan.
By Tsvetana Paraskova for Oilprice.com
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.