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REGNUM: Russian energy ministry: Sakhalin natural liquefied gas will open way to Russia for Asian markets

Delivery of natural liquefied gas that will be produced in Sakhalin within frameworks of the Sakhalin 2 project are fully oriented towards exports and will help Russia strengthening its positions substantially in Asian-Pacific fuel markets, a source at the Russian Industry and Energy Ministry told a REGNUM correspondent commenting on preparatory works on produce of liquefied gas in Sakhalin.

The plant that will be producing liquefied gas has not been launched officially yet, but its construction is accomplished by more than 90%. Total amount of Sakhalin liquefied gas, supplies of which are to start in 2008, is contracted up to date.

Russia plans to export liquefied gas to the Asian-Pacific market, where it will compete with companies from Qatar, Malaysia, Indonesia and Australia, the source said. No gas delivery to Russia’s domestic market is planned because of several objective reasons. First of all, there are no capacities in Russia to convert the liquefied gas. Second, the country’s internal energy balance is provided at the expense of the natural gas extracted in the country. Prospects of constructing new facilities to produce liquefied natural gas depend, first of all, on rate of development of relevant gas fields and on demand for the product.

the Sakhalin 2 project is carried out on the basis of a production sharing contract and provides for the development of the Piltun-Astokh and Lunsky fields, whose recoverable reserves make up 150mln tons of oil and 500bln c m of gas, respectively.

The shareholders of the project operator, Sakhalin Energy, are Royal Dutch, Shell, Mitsui and Mitsubishi. The second project provides for the construction of 800-km oil and gas pipelines from northern to southern Sakhalin. The pipelines will transport gas and oil to the local LNG Plant and oil terminal.

In 1996-2006 the investments in the Sakhalin-2 project made up $12.5bln. The production sharing contract stipulates that the Russians should pay 6% royalties. Till 2045 Russia will get $50.1bln from the project.

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