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UPI Energy Watch: Gazprom in talks with Japanese banks on Sakhalin-2

Published: Sept. 19, 2007 at 2:21 PM
By ANDREA R. MIHAILESCU

Russian gas giant Gazprom has resumed negotiations with the Japan Bank for International Coop. to secure financing for the $20-plus billion Sakhalin-2 liquefied natural gas development project.

Financing the multibillion dollar project has become a key issue after the European Bank for Reconstruction and Development, a core member of the planned lending syndicate, pulled out in early August because of concerns about how Gazprom gained control.

Alexander Medvedev, deputy chairman of Gazprom, told the Nikkei that Gazprom and the three Sakhalin-2 partners have reached a memorandum of understanding for financing from JBIC.

Medvedev said the EBRD’s withdrawal would not affect JBIC’s lending.

The parties continue to hold talks about finalizing a deal. Medvedev said JBIC would consider financing not only Sakhalin-2, but also other resource development projects in such areas as eastern Siberia.

The Sakhalin-1 natural gas project, led by Exxon Mobil Corp., may serve as a test case. Exxon has already reached a basic agreement to export output to China. But noting that ExxonMobil’s plan presents economic issues, Medvedev indicated that progress has been made in negotiations to purchase the gas output. The gas would then be supplied to the Russian market or exported, he said.

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