Mitsui join LNG Project in Artic Ocean off Russia

Major trader Mitsui & Co. officially announced Saturday that it and government-linked Japan Oil, Gas and Metals National Corp. (JOGMEC) will jointly invest in a planned Russian-led liquefied natural gas project in the Arctic Ocean along the Russian coast.

Tokyo has voiced its expectation for Mitsui’s participation in the large-scale project, calling it a centerpiece of the country’s economic cooperation for Russia.

Mitsui President and Chief Executive Officer Tatsuo Yasunaga signed the deal on Saturday, the same day Prime Minister Shinzo Abe and Russian President Vladimir Putin met in Osaka.

Japan Arctic LNG BV, a Dutch joint venture that is 75 percent owned by JOGMEC and 25 percent owned by Mitsui, will acquire a stake of 10 percent in Arctic LNG 2 LLC, the operator of the project, for which total investment is expected to reach up to $23 billion, according to the trader.

With the Japanese participation, Arctic LNG 2 will be owned 60 percent by major Russian natural gas producer Pao Novatek, and 10 percent each by French energy giant Total SA, a subsidiary of China National Petroleum Corp. and a unit of China National Offshore Oil Corp.

LNG production from the project is slated to start around 2023 with an annual capacity of 19.8 million tons.

Global warming has made it possible for ships to sail in the Arctic Ocean along the Russian coast during the summer, enabling LNG transportation to Japan and other parts of East Asia in a relatively short period of time, according to Mitsui.

The investment announcement also comes amid heightened tensions in the Middle East.

There is some concern that the Arctic Ocean LNG project will be subjected to Western sanctions against Russia that were imposed after the country’s annexation of Crimea in 2014.

At a general meeting of Mitsui shareholders on June 20, Yasunaga brushed aside such concerns, saying that the company has been studying Russian projects while carefully managing risks related to the sanctions.