Russia Asks For LNG Payments Via Moscow Bank

Russian Sakhalin Energy Investments Co is asking the buyers of its liquefied natural gas to pay for it via the Moscow branch of an international bank, Reuters has reported, citing unnamed sources.

Advertisement

The source added that the Russian company was also in talks to change the currency, in which the payments for LNG are made from US dollars. Some buyers of Sakhalin LNG were already making their payments via the designated bank, but in dollars, the sources also said.

The move is part of a wider push to move payments for Russian hydrocarbons from the US dollar to other currencies, including the ruble. Russia is already asking for ruble payments for the gas it exports to European countries.

Currently, there are two Japanese companies buying LNG from Sakhalin Energy Investments Co., which Moscow moved to basically nationalize earlier this year. This would happen by setting up a new company to take over all the assets and obligations of Sakhalin Energy Investments Co., which operates the Sakhalin-2 oil and gas project.

Gazprom is the majority shareholder at the project with 50 percent plus one share. The rest is divided between Shell, Mitsui & Co., and Mitsubishi Corp.

Despite Moscow’s move to nationalize the operator of Sakhalin-2, the long-term contracts that Sakhalin Energy Investments Co. has with its two Japanese buyers are still active.

These contracts account for more than half of the nameplate capacity of Sakhalin-2, which stands at 9.6 million tons annually. Among the other buyers of Sakhalin-2 LNG are companies from China, Taiwan, Singapore, and South Korea.

Shell already said it would leave the project a few months ago and has since been looking for buyers for its stake in Sakhalin-2. According to earlier reports, a sale could be made to a group of Indian companies.

The Japanese companies, however, have not announced intentions to leave the project. In fact, earlier this year, Japan’s economy, trade and industry minister, Koichi Hagiuda, said that the Sakhalin-1 and Sakhalin-2 projects “are essentially important for energy security because the projects allow Japan to procure supplies below the market price, especially amid current high energy prices.”

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:

.

Advertisement

What do you think?

Advertisement

Biden Savors Much-Needed Victories. But Will the Highs Overshadow the Lows?

Study Finds Vitamin D Supplements Do Not Reduce Risk of Broken Bones