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Daily Telegraph: Sakhalin-2 partners review financing

By James Quinn
Last Updated: 12:05am GMT 01/01/2007
 
Royal Dutch Shell and its Japanese partners in Sakhalin-2 are to re-examine the financing of the $20bn (£10.2bn) energy project after their deal to sell a controlling stake to Russia’s Gazprom.

Shell, Mitsubishi and Mitsui are due to speak to the four potential project lenders about whether or not the four will potentially still invest in the scheme.

The talks will begin later this month amid suggestions that one of the four – the European Bank of Reconstruction and Development – does not now want to provide a €400m (£270m) loan as the project is effectively state-owned. Gazprom, which is owned by the Russian state, took a controlling stake of 50pc plus one share in Sakhalin-2 days before Christmas after the three original investors each sold half of their stakes in return for a total $7.45bn cash.

The sale took place after the Russian government led a year-long campaign of disruption, during which it threatened to cancel construction permits on environmental grounds and also threatened not to approve requests to double the investment plan.

A Shell spokesman said yesterday: “Gazprom is a valuable partner. We must now determine the next steps and engage with the lenders.” The other prospective lenders indicated on Sakhalin’s website are the Japanese Bank for International Co-operation, the US Export-Import Bank, and the British Government’s Export Credit Guarantee Department. Each will have its own views on the level of control Gazprom exerts on Sakhalin, but it is clear that arranging the financing for the project will not be plain sailing.

The EBRD is said to have not made a final decision on its role, but one source was quoted as saying that the project had been effectively nationalised as a result of Gazprom’s involvement.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/01/01/cnsakh01.xml

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