[Iris7]

Sakhalin Island is in the middle of a multi-billion dollar oil and gas fields development project. Most of the wells are offshore. The Japanese are mad that the Russians have it instead of them. End of story.

Well, no, not the end of the story. The whole continental shelf in that area is probably lousy with fossil hydrocarbons. Very definitely including the Kuril Islands.

Give it back to Japan? Less than a snowball's chance in Hell.

A Businessweek "executive overview".

This is a description of Phase II, not yet started.

[Jedi Master Pikachu]

Bluntly put, you seem to know less about the Japan/Russia historical relationship than people know that their is oil in the region. For Russia, a large part is probably oil, though some of it is pride. The Japanese have dead relatives buried on some of the islands, and pride is also a factor for them. The lands/region has been in dispute since the end of the second World War, before oil exploration in the region.