Mitsubishi to increase its stake in Sakhalin II
Mitsubishi will increase its stake in the Sakhalin II oil and natural gas development project now run by a consortium
of four Japanese, US and European firms.
By the end of the month, the trading house will boost its stake in Sakhalin Energy Investment, which is charged with developing the field in the waters just east of Russia's Sakhalin island, by an additional 7.5 percentage points, buying shares from Shell. The purchase is expected to total between Y 15 bn ($ 135.7 mm) and Y 20 bn ($ 180.9 mm).
Shell is taking possession of all of US-based Marathon Oil's 37.5 % stake in the Sakhalin project and is expected to sell a portion of that to Mitsubishi.
With the increased stake, Mitsubishi and fellow consortium member Mitsui & Co. will hold a combined total of 45 % of the project. This will enable the firms to secure a stable source to procure high-quality oil and gas with lower shipping costs due to the field's proximity to Japan.
The larger stake will also allow Mitsubishi to expand its LNG business, amid expectations of a sharp rise in demand
as Japanese companies look to reduce their energy dependence on Middle Eastern oil.
After the transfer of shares, Shell will hold a 55 % stake in the venture, Mitsui 25 % and Mitsubishi 20 %. But the Japanese firms may try to raise their stakes further, analysts say.
A total of more than Y 1 t ($ 1.04 bn) will likely be invested in developing the project, which is estimated to have reserves of around 1 bn barrels of crude oil and natural gas reserves equivalent to 280 mm tons of LNG.