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UpstreamOnline: Japan shrugs off Sakhalin 2 woes

By Upstream staff

A Japanese government official said today that the Sakhalin 2 liquefied natural gas development in Russia’s far east will come on stream despite opposition by the Russian environmental regulator.

Takao Kitabata, the vice minister of Japan’s Ministry of Economy, Trade & Industry, said that the Shell-led project would move ahead, according to a statement published on the ministry’s website.

“It is possible that (the project) may see problems at various stages of the construction process and one of them is happening now. But in the long term, it will move forward to completion,” Kitabata said.

Sakhalin 2 is led by Shell, which operates the project with a 55% stake. Japan’s Mitsui & Company holds 25% in the $20 billion project, and Mitsubishi Corporation has 20%.

The project is expected to start supplying LNG in 2008 and more than 80% of its 9.6 million-tonnes-per-year production has been committed to customers in Japan, South Korea and the US.

Earlier this month, Russia’s environmental watchdog stepped up pressure on Sakhalin 2 saying it had asked a court to recognise that the giant project was not complying with ecological rules.

The watchdog said that work at the project would have to stop if the suit, filed at a Moscow court, was successful.

Sakhalin-2 has faced increasing opposition from Russian authorities, and analysts see it as a broader move by the Kremlin to tighten its grip on the strategic energy sector at a time of record high oil prices.

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