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BBC Monitoring Service: Sakhalin-2

The Supervisory Board has approved the estimate of the second phase of the Sakhalin-2 project, GTRK Sakhalin TV reported on 19 April. The Russian Ministry of Industry and Energy jointly with the shareholders of the Sakhalin-2 project approved all documents needed for the implementation of the project with the participation of a Russian investor.

The Supervisory Board gathered for the first time in its new composition; in line with the decree of the Russian government, the composition of the representatives from the Russian side was renewed. Ivan Materov, deputy head of the Russian Ministry for Industry and Energy, and Sakhalin Region governor Ivan Malakhov, were approved as co-chairmen of the Supervisory Board. Ilya Trunin, head of the department for tax, customs and tariff policy of the Russian Finance Ministry; Sergey Fedorov, head of the department for state policy in the sphere of subsoil use of the Russian Ministry of Natural Resources; Vladimir Kuznetsov, deputy head of the Federal Energy Agency; and Arkadiy Pinchevskiy, Sakhalin Region deputy governor, became members of the Supervisory Board.

At an extraordinary sitting on the Sakhalin-2 project the Supervisory Board summed up the work of various state departments and expert organizations that analysed the amendments into the estimate and the working programme.

The Supervisory Board approved the amendments into the estimate of the second phase of the Sakhalin-2 project for the period up to 2014 in the part of capital investment that will total 19.4bn dollars.

They also approved the mechanism designed to increase the efficiency of the project and to provide protection of the economic interests of the state within the framework of the Sakhalin-2 project. (GTRK Sakhalin TV “Vesti Sakhalin-Kurily” news, Yuzhno-Sakhalinsk, 0830 gmt 19 Apr 07)

On 18 April, the shareholders of Sakhalin Energy signed an agreement with Gazprom on buying and selling which envisages the transfer of shares in Sakhalin Energy. In line with the new composition of Sakhalin Energy shareholders, the stake of Gazprom will total 50 per cent plus one share. The other shares in the project will remain with Royal Dutch Shell (27.5 per cent), Mitsui (12.5 per cent) and Mitsubishi (10 per cent).

Sakhalin Energy keeps its status of an operator of the Sakhalin-2 project that will continue to be implemented on the base of Production sharing agreement (PSA) signed between the Russian Federation and Sakhalin Energy in 1994.

Ian Craig, the chief executive director of Sakhalin Energy, said that the entry of Gazprom into the project will provide inestimable contribution of this world largest gas corporation into the implementation of the Sakhalin-2 project. “We appreciate the entry of the world leading gas company into Sakhalin Energy as the main shareholder. Gazprom brings into the Sakhalin-2 project its vast experience that will be useful for the completion of the remaining work in the phase two and for the increase of the significance of the project in the long-term prospects,” Craig said. (TIA Ostrova, Yuzhno-Sakhainsk, 0156 gmt 19 Apr 07)

Gazprom has completed the purchase of the controlling stake in the Sakhalin-2 oil and gas project. Now, Gazprom will send two his representatives for work in Sakhalin Energy which is the operator of the project, the Sovetskiy Sakhalin newspaper reported on 20 April.

By late 2008, when the production of the liquefied natural gas is launched, a representative appointed by Gazprom will become head of Sakhalin Energy, Aleksandr Medvedev, deputy chairman of the board of directors of Gazprom said.

Gazprom already paid 7.4bn dollars for the controlling stake of 50 per cent plus one share. An important term of the bargain was that Gazprom enters the project as a shareholder from the very beginning of its implementation. From now on, Gazprom shoulders the entire burden connected with the project including its environmental component. Medvedev is sure that Russia will not have any new grounds for the presentation of environment claims to the Sakhalin-2 project provided the plan of nature protection measures will be fulfilled.

Ian Craig said that the plan of nature protection measures was presented in March and refined with the participation of the Gazprom representatives. This plan comprised all nature protection measures that allow to remove all short-term effects on the nature of Sakhalin, Craig added.

Craig emphasized that the implementation of such a large-scale project could be impossible without any effect on the nature. “The fulfilment of the plan of nature protection measures that was approved by Russian Ministry of Natural Resources will prove that the effect on the Sakhalin nature was really short and renewable,” he said.

“We appreciate the entry of Gazprom into the Sakhalin-2 project. This event, equally with the approval of the nature protection events by the state authorities, is an important step towards the successful implementation of the project,” Malcolm Brinded, executive director for exploration and production of Royal Dutch Shell, said. and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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