Photo/Illutration The tanker Sun Arrows loads its cargo of liquefied natural gas from the Sakhalin-2 project in the port of Prigorodnoye, Russia, on Oct. 29, 2021. (AP Photo)

A rapid exit of Western companies from Russian ventures in response to the military invasion of Ukraine has put Japanese enterprises on edge as they weigh taking the same drastic action.

A major shock came in the form of a Feb. 28 announcement by Shell Plc of Britain that it was pulling out of energy enterprises in Russia, including the Sakhalin II liquified natural gas project.

Two Japanese trading companies, Mitsui & Co. and Mitsubishi Corp., have stakes in the Sakhalin II project, which is a major source of LNG for Japan.

“The government will deal with the matter appropriately while continuing to cooperate with the international community, including Group of Seven nations, from the standpoint of energy security,” Chief Cabinet Secretary Hirokazu Matsuno said at a March 1 news conference.

Matsuno noted that operations at Sakhalin II had not been interrupted and said there would be no effect on fuel exports to Japan.

Officials of the two trading companies said they would continue to hold discussions with the government after analyzing the contents of the Shell announcement.

ExxonMobil of the United States also announced March 1 it was pulling out of the Sakhalin I project in Russia.

Touching upon recent events there, the company issued a statement that said, “We are deeply saddened by the loss of innocent lives and support the strong international response.”

Sakhalin Oil and Gas Development Co. (SODECO), which was set up by Japanese trading houses Itochu Corp., Marubeni Corp. and government-affiliated oil companies, holds a 30-percent stake in Sakhalin I.

Other Japanese companies operating in Russia were also considering whether to continue with operations or pull up stakes.

Mitsubishi Motor Corp. has a plant in western Russia through a joint venture with European automaker Stellantis. Mitsubishi Motor officials said March 1 they were considering whether to suspend operations because of problems shipping parts from Japan and Thailand to the Russian facility, which manufactured around 21,000 vehicles in 2021.

Toyota Motor Corp. and Nissan Motor Co. also have plants in Russia that are currently operating, but company officials said they may have to review production plans depending on the availability of parts.

Companies that sell products in Russia also face the problem of receiving payment now that economic sanctions have excluded major Russian banks from the international settlement network known as SWIFT.

The former Soviet Union region accounts for about 10 percent of annual sales for construction machinery manufacturer Komatsu Ltd. Company officials set up an emergency task force to discuss the next step.

Japanese companies will also have to consider their corporate social responsibility in deciding whether to continue with operations in Russia.

“We will have to think much more seriously about the significance and risks involved in doing business with a nation that has a vastly different set of values,” Kengo Sakurada, the head of Keizai Doyukai (Japan Association of Corporate Executives), said at a March 1 news conference.

(This article was compiled from reports by Keishi Nishimura, Junichi Kamiyama and Takehiro Tomoda.)

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