Revocation of ecological sanctions may result in a possible delay in the development of Sakhalin-2 project.
Japan & Russia's diplomatic relations could possibly be in danger due to Russia's withdrawal of ecological approvals for Sakhalin-2 project, said Shinzo Abe, a spokesman for Japanese Govt.
Abe said that Japan's trading giants Mitsui & Mitsubishi hold a combined stake of 45 % in the project and these delays could well make a negative impact on relations between the two nations.
As per resource ministry of Russia, this move doesn't mean that they are closing the project. Sakhalin-2 is situated in far-eastern part of Russia & Royal Dutch Shell and owns 55% share in the project. Mitsui holds a 25 % share whereas Mitsubishi has a 20% stake in it. The two Japanese companies have invested around $4.7 billion in this project and Mitsui aims to invest around $1.7 billion in the coming two years.
"US has already accused Russia for using its vast energy resources to blackmail & intimidate other nations. If Sakhalin-2 fails, not only will it cast a negative impact on diplomatic relations between Russia & Japan but may also affect Russia's energy exports", said an analyst at RNCOS.
Japanese Govt is currently divided over the issue whether to continue or not the development of the project. A spokesman for Gazprom, Russian gas giant, said that they couldn't continue discussions in such a situation. Both the Japanse firms declined to give their comments on this issue.
Alexander Losyukov, Russian ambassador in Tokyo told Toshihiro Nikai, Japan's Minister for Trade told that Russia didn't intend revocation to be used for exclusion of overseas capital from its energy assets.
The project, presently generating crude oil, will develop into largest LNG (liquefied natural gas) project when LNG production starts in 2008.
