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RIA Novosti: Sakhalin II shareholders urged to bring EBRD back into project

13:58 | 26/ 02/ 2007 

TOKYO, February 26 (RIA Novosti) – Sakhalin II shareholders should work to restore financing from the European Bank for Reconstruction and Development for the hydrocarbon project off Russia’s Pacific coast, a Russian minister said Monday.

The EBRD delayed its decision on a second loan to the oil and gas project, when the then Shell-controlled operator came under intense pressure from regulators last year, and a controlling stake was sold to Russian energy giant Gazprom [RTS: GAZP]. Experts say the bank’s participation could allay foreign investors’ fears in the wake of the environmental scandal surrounding the project.

“Although the EBRD’s share in the aggregate funding is no more than 5%, it is a substantial factor in the project’s implementation. I am sure that Gazprom and its partners should do all they can to ensure funding for the final stage of the project,” said Industry and Energy Minister Viktor Khristenko, who is also the Russian co-chairman of the Russian-Japanese intergovernmental trade and economic commission.

Before the deal with Gazprom, the shareholders had asked the development bank for another $300 million. However, Gazprom officials said the sum was not vital for the project, estimated at over $20 billion.

EBRD President Jean Lemierre said last month the bank could consider new cooperation arrangements under the project with the new core shareholder.

Gazprom purchased 50% plus one share in Sakhalin II for $7.45 billion, becoming the project’s majority shareholder in December. Royal Dutch Shell and Japan’s Mitsui and Mitsubishi now hold 27.5%, 12.5% and 10% in the project respectively.

The former operator could still face court proceedings on compensation for environmental damage estimated by Russian regulators at between $10 billion and $30 billion.

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