Shares in Mitsui, Mitsubishi dive as Japan-Russia tension over gas, oil spikes

The comments from Kishida and Medvedev further escalate a fraught situation after Russia announced on Friday a decree that seizes full control of the Sakhalin-2 project in the country's far east, a move that could force out its Japanese trading firm investors as well as Shell. Japan's government spokesperson Seiji Kihara said on Wednesday he was aware of Medvedev's remarks but declined to comment on them.


Reuters | Updated: 06-07-2022 11:50 IST | Created: 06-07-2022 11:46 IST
Shares in Mitsui, Mitsubishi dive as Japan-Russia tension over gas, oil spikes
Mitsubishi Corp Image Credit: Mitsubishicorp.com

Shares in Mitsui & Co and Mitsubishi Corp, investors in the Sakhalin-2 gas and oil project, tumbled on Wednesday as tensions between Moscow and Tokyo ratcheted higher with former Russian president Dmitry Medvedev threatening that Japan could be cut off from Russian gas and oil. Medvedev's remarks came after Japanese Prime Minister Fumio Kishida said during a stump speech over the weekend that the Group of Seven (G7) countries had agreed to cap the price of Russian oil at around half its current level.

G7 leaders last week agreed to explore imposing a ban on transporting Russian oil that has been sold above a certain price in an effort to reduce Moscow's revenues and deplete its war chest but had not mentioned a specific figure for the cap. If a cap of that level was implemented, Japan "would have neither oil nor gas from Russia, as well as no participation in the Sakhalin-2 LNG project," Medvedev, now deputy chairman of Russia's Security Council, wrote on social media on Tuesday.

He added oil could top $300 to $400 a barrel if such a price cap was used. The comments from Kishida and Medvedev further escalate a fraught situation after Russia announced on Friday a decree that seizes full control of the Sakhalin-2 project in the country's far east, a move that could force out its Japanese trading firm investors as well as Shell.

Japan's government spokesperson Seiji Kihara said on Wednesday he was aware of Medvedev's remarks but declined to comment on them. He also declined to confirm if there was a specific figure for a cap being considered by the G7, saying only that the "specifics of a cap and pricing level are yet to be decided and will be discussed among G7 members".

Shares in Mitsui, which has a 12.5% stake in the project, slid 5.7%, bringing the giant trading firm's stock losses since Thursday to 7.6%. It declined to comment on Medvedev's comments and reiterated that it was seeking to confirm and analyze the contents of the Russian decree on the Sakhalin-2 project and would be discussing developments with stakeholders.

Mitsubishi, which has a 10% stake in the project, saw its shares fall 5% for a 6.4% decline since Thursday. A Mitsubishi representative was not immediately available for comment on Medvedev's remarks. It has said it is discussing with its Sakhalin-2 partners and Japan's government about how to respond to the decree.

The Sakhalin-2 project is one of the world's largest LNG projects and about 60% of the LNG it supplies under long-term contracts is shipped to Japan.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

Give Feedback