Japan firms may sell Gazprom 5% of Sakhalin-2: paper

TOKYO, Sep 21 (Reuters) Japanese trading houses Mitsui&Co. Ltd. and Mitsubishi Corp. are in talks to sell a combined 5 percent stake in the Royal Dutch Shell-led Sakhalin-2 oil and gas project to Russia's state-run Gazprom, Japan's Yomiuri newspaper reported on Thursday.

The Shell-led project is due to begin shipping large volumes of natural gas to Japan in two years. But it faces uncertainty after Russia revoked environmental approvals on Monday in a move seen by many as the Kremlin's latest effort to take more control over energy resources.

Russia's ambassador to Japan, Alexander Losyukov, told reporters on Wednesday that Sakhalin-2 might be able to operate sooner if a state-run company joined the project.

Mitsui, which has a 25 percent stake in the project, may sell a 3 percent stake, the newspaper said. Mitsubishi, which owns 20 percent, may sell a 2 percent stake, the paper said.

A sale by the trading firms of part of their holdings has been widely expected. A combined five percent stake sale would fit with Losyukov's comments on Wednesday. He said Gazprom was in talks with Shell to take a 20 percent stake, while the Russian gas monopoly has said it would take 25 percent in Sakhalin-2.

Losyukov also said the talks between Shell and Gazprom would conclude by the end of this year.

Mitsui and Mitsubishi denied the Yomiuri report and said nothing has been decided about a share sale.

A spokesman for Mitsui said the trading firms were not part of current talks between Shell and Gazprom and that they would decide on a possible share sale after those talks had ended.

''We are now closely watching the talks between Gazprom and Shell,'' a Mitsui spokesman said, adding that Mitsui had long said it would welcome strong partners from host countries such as Gazprom in large-scale projects.

Analysts have said a share sale by Mitsui and Mitsubishi would be positive in that it would bolster political support for the project, but they are worried the two firms could be pressured to sell at a low price to Gazprom, which could hurt their share prices.

Mitsui shares rose 0.5 percent to 1,453 yen by midday while Mitsubishi rose 1 percent to 2,110. The Nikkei average rose 0.15 per cent.

REUTERS DKS BST0802