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MOSCOW: Russian President Vladimir Putin has handed full control over a major oil and natural gas project partly owned by Shell and two Japanese companies to a newly created Russian firm, a bold move amid spiraling tensions with the West over Moscow鈥檚 military action in Ukraine, according to Associated Press.
Putin鈥檚 decree late Thursday orders the creation of a new company that would take over ownership of Sakhalin Energy Investment Co., which is nearly 50 percent controlled by British energy giant Shell and Japan-based Mitsui and Mitsubishi.
Putin鈥檚 order named 鈥渢hreats to Russia鈥檚 national interests and its economic security鈥� as the reason for the move at Sakhalin-2, one of the world鈥檚 largest export-oriented oil and natural gas projects.
The presidential order gives the foreign firms a month to decide if they want to retain the same shares in the new company.
Russian state-controlled natural gas giant Gazprom had a controlling stake in Sakhalin-2, the country鈥檚 first offshore gas project that accounts for about 4 percent of the world鈥檚 market for liquefied natural gas, or LNG. Japan, South Korea and China are the main customers for the project鈥檚 oil and LNG exports.
Kremlin spokesman Dmitry Peskov said Friday that there is no reason to expect a shutdown of supplies following Putin鈥檚 order.
Shell held a 27.5 percent stake in the project. After the start of the Russian military action in Ukraine, Shell announced its decision to pull out of all of its Russian investments, a move that it said has cost at least $5 billion. The company also holds 50 percent stakes in two other joint ventures with Gazprom to develop oil fields.
Shell said Friday that it鈥檚 studying Putin鈥檚 order, which has thrown its investment in the joint venture into doubt.
鈥淎s a shareholder, Shell has always acted in the best interests of Sakhalin-2 and in accordance with all applicable legal requirements,鈥� the company said in a statement. 鈥淲e are aware of the decree and are assessing its implications.鈥�
Seiji Kihara, deputy chief secretary of the Japanese cabinet, said the government was aware of Putin鈥檚 decree and was reviewing its impact. Japan-based Mitsui owns 12.5 percent of the project, and Mitsubishi holds 10 percent.
Kihara emphasized that the project should not be undermined because it 鈥渋s pertinent to Japan鈥檚 energy security,鈥� adding that 鈥渁nything that harms our resource rights is unacceptable.鈥�
鈥淲e are scrutinizing Russia鈥檚 intentions and the background behind this,鈥� he told reporters Friday at a twice-daily news briefing. 鈥淲e are looking into the details, and for future steps, I don鈥檛 have any prediction for you at this point.鈥�
Asked during a conference call with reporters if Putin鈥檚 move with Sakhalin-2 could herald a similar action against other joint ventures involving foreign shareholders, Peskov said, 鈥淭here can鈥檛 be any general rule here.鈥�
He added that 鈥渆ach case will be considered separately.鈥�
Sakhalin-2 includes three offshore platforms, an onshore processing facility, 300 kilometers of offshore pipelines, 1,600 kilometers of onshore pipelines, an oil export terminal and an LNG plant.