Martyn Wingrove, Lloyds List
Published: Aug 15, 2007
GAZPROM’s push into the Sakhalin Energy Investment consortium has forced the European Bank of Reconstruction and Development to pull its funding for the Sakhalin II oil and liquefied natural gas project off eastern Russia.
Since January, EBRD and the Sakhalin Energy shareholders Gazprom, Royal Dutch Shell, Mitui and Mitsubishi have been in discussions over project finance.
EBRD has cut off these discussions in favour of financing other projects, such as those that promote sustainable energy, the bank said.
Sakhalin Energy is developing oil and gas resources in two fields off the eastern Russia island and hopes to commence LNG exports in 2008.
Late last year, the Russian government strongarmed Shell and its partners to allow Gazprom, the state gas monopoly, to buy up a controlling stake in the Sakhalin II licence and hydrocarbon production facilities. These include three offshore production platforms, two island-long pipelines, an oil tanker terminal and a liquefied natural gas plant.
This changed the structure of the operating company and its agreements with financial institutions. ‘It has become clear that in the light of the timetable envisaged by the shareholders, the financing from ERBD is not feasible,’ the ERBD said.
‘Gazprom and the other shareholders have reached an advanced stage in the negotiations for the financing of Sakhalin II and now expect to reach financial closure in the next few months.’
Some of the other potential lenders, including the UK’s Export Credit Guarantee Department and the US Export-Import Bank, are still awaiting a report from environmental consultants.
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