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earthtimes: Gazprom board approves Sakhalin-2 buy

Posted on : Thu, 01 Mar 2007 01:57:00 GMT

MOSCOW, Feb. 28 It’s official now: Gazprom officially owns a majority share in the Sakhalin-2 project in Russia’s Far East with its board’s vote Wednesday.

The state-run gas monopoly announced in December it had come to terms on the purchase of a 50 percent plus one share in Sakhalin Energy, the operator of the Sakhalin-2 natural gas and oil project.
Sakhalin Energy was owned by Shell (with a 55 percent stake), and Japan’s Mitsui (25 percent) and Mitsubishi (20 percent). But after Kremlin-backed efforts to get a state stake in the project, the sides agreed to a Gazprom buyout of $7.45 billion for a controlling stake in the $22 billion project.

The Board of Directors has approved the deals related to Gazprom’s purchase of a majority stake in Sakhalin Energy Investment Company Ltd, said a Gazprom statement, RIA Novosti reports. Sakhalin-2 includes oil fields with associated gas as well as natural gas fields with associated condensate production, along with a pipeline, a liquefied natural gas plant and an LNG export terminal.

Markets in Japan will receive the bulk of the LNG.

An estimated 1.1 billion barrels of oil and 500 billion cubic meters of natural gas are in the two Sakhalin-2 fields.

The Shell-led group had initially refused to renegotiate production sharing agreements signed in 1994 that gave the company highly favored terms over Russia. But after Moscow pressure, including action by the natural resources ministry over alleged environmental law violations, Gazprom was offered the deal.

Copyright 2007 by UPI 

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