Mitsui to Join LNG Project in Arctic Ocean off Russian Coast

Mitsui & Co. officially announced over the weekend that along it will invest in a planned Russian-led liquefied natural gas project in the Arctic Ocean off the coast of Russia, together with government-linked Japan Oil, Gas and Metals National Corp. (JOGMEC).

The government of Japan has expressed its expectation that major trader Mitsui participate in the large-scale project, saying that it is vital to Tokyo’s economic cooperation with Moscow.

The deal was signed by Mitsui President and Chief Executive Officer Tatsuo Yasunaga on Saturday, the same day the Japanese prime minister met with President Vladimir Putin at the G20 summit in Osaka.

Japan Times reports that Japan Arctic LNG BV will have a 10-percent stake in Arctic LNG 2 LLC, the operator of the project, the total investment of which is likely to reach $23 billion.

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.

Production will likely start by 2023 and have an annual capacity of 19.8 million tons.

Mitsui has said that ships can sail in the Arctic Ocean along the Russian coast during the summer thanks to global warming, which enables LNG transportation to Japan and other parts of East Asia in a relatively short period of time.

However, the project has caused concern among some that the U.S. could impose sanctions on Russia, just like it did after the annexation of Crimea. These concerns were dismissed at a general meeting of Mitsui shareholders when Yasunaga said the company has been studying Russian projects while carefully managing risks related to the sanctions.