Image source, Getty ImagesRussia is taking over a major oil and gas project with a Shell stake.
On Thursday, Putin signed a decree to take charge of the project.
The move could force Shell and Japan'sMitsubishi to abandon their investments as the economic effects of the Ukraine war spread.
The decree is being assessed by Shell, the oil giant said.
The decree stated that a new firm would take over all rights and obligations.
The flagship Sakhalin 2 facility in Russia's far east will be sold by Shell.
It said in April that leaving Russia would cost it over 3 billion dollars.
About 4% of the world's currentLNG market is supplied by the project, which is 50% owned and operated by the company.
The decree states that the Russian government must get a stake in the new firm within a month.
They will be allowed to keep a stake if the government allows it.
According to previous reports, Shell is in talks with potential buyers from China and India.
Ben van Beurden said that Shell was making good progress in its plan to leave the joint venture.
When I got an update last week, I was really pleased with where we are, because it's a commercial process, but I can't tell you where we are.
This appears to be politically motivated. Japan has been heavily involved in sanctions against Russia.
There are three foreign companies with stakes in Sakhalin-2.
Shell wrote off the value of its assets in Russia.
Japan's dependence on imports of liquid natural gas is high.
The Sakhalin project is currently meeting about 8% of its needs, because of the intense competition for shipments around the world.
Although ministers in Tokyo insist it will not make imports "immediately impossible", the prospect of Russiaropriating Japanese interests in the project is certain to generate a queasy response.
Competition for available supplies will increase if Russian supplies to Japan are stopped.
At a time when inflation is increasing, that could push up prices.
The decree states that it's up to the Kremlin to decide if foreign shareholders should stay in the consortium.
Even if asked to leave, Japan will not give up its interest in the Sakhalin-2 project.
On Friday, shares in the two companies fell due to worries about losses.
The company is in talks with its partners about how to respond to Putin's decree.
When asked if it was in the process of confirmation, Mitsui said it was.
Shell has a share in the project, minus one share. The Russian gas giant has a 50% stake.
According to Shell, Japan, South Korea and China are the main buyers of oil and gas.
The Japanese government is analyzing Moscow's intentions, according to the deputy chief cabinet secretary.
He declined to say if Japan was in contact with Moscow over the matter.
The government did not consider the decree a request, according to Koichi Hagiuda.
He said that the decree doesn't mean that Japan's LNG imports will be impossible, but that it is necessary to take all possible measures in case.
Russian Liquefied Natural Gas production from projects like Sakhalin-2 is likely to suffer over time as foreign expertise and parts become unavailable, according to Saul Kavonic.
The market for Liquefied Natural Gas will tighten this decade.
The increase in Russian government involvement will make it harder for buyers to procure from these projects.
He said that Japan was looking for alternatives.
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