Japan’s Mitsui writes down value of Russian LNG stakes

Japanese trading house Mitsui & Co said it has decided to write down the value of its investments in two Russian LNG export projects for about $619 million.

Mitsui has a 12.5 percent stake in the Gazprom-operated Sakhalin-2 LNG export facility in Prigorodnoye, and a 10 percent stake in the Novatek-operated Arctic 2 facility, still under construction on the Gydan peninsula.

The firm said in its full-year results report that it has has reduced the fair value of its stake in the Sakhalin 2 LNG project by about 44.1 billion yen and the Arctic 2 LNG project by 36.4 billion yen, totaling 80.6 billion yen or about $619 million.

Mitsui said it has reassessed fair value of the investments to reflect a downgrade of the Russian government’s credit rating.

Net loss

Besides the value changes, the firm booked a loss of 20.9 billion yen in the January-March quarter on its LNG business in Russia.

Mitsui said its net position of investments, loans and guarantees was down to 404.7 billion yen, not including the provisions on guarantees, when compared to 430 billion yen in the prior quarter.

Unlike its European partners, Mitsui will continue its involvement in Russian LNG projects.

To remind, Shell said earlier this year it would exit its joint ventures with Russia’s Gazprom and related entities, including its 27.5 percent stake in the Sakhalin-2 LNG export terminal.

On the other side, France’s TotalEnergies recently said it would book a $4.1 billion impairment charge on Novatek’s Arctic LNG 2 export project under construction in Russia.

Prior to that, TotalEnergies said it would no longer provide capital and book proven reserves for the Arctic LNG 2 project.

TotalEnergies holds a 10 percent stake in the 19.8 mtpa Arctic LNG 2 development, as well as a 20 percent in Novatek’s Yamal LNG project and a 19.4 percent interest in Novatek.

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