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Gulf Daily News (Bahrain): Sakhalin Energy postpones LNG exports to Asia

(This article was kindly supplied to us today by Dmitry Lisitsyn of Sakhalin Energy Watch:

Saturday 22nd December 2007 

MOSCOW: Sakhalin Energy, one of the world’s top liquefied natural gas (LNG) projects, will delay first exports to Asia by six months to spring 2009 due to problems with pipelines, the governor of Sakhalin said.

The comment confirms a report that the project leader, Russia’s Gazprom, and its partner Royal Dutch Shell will effectively delay supplies due to project holdups.

“There will be no LNG supplies next year. They are delayed to spring 2009. Other plants will help meet the customers needs,” governor Alexander Khoroshavin said.

He said the consortium was seeking bridging supplies to meet demand from Japanese customers, which had expected first LNG shipments to arrive in the third quarter of next year.

Industry experts have said the delay would create bullish pressures on the LNG market in Asia where customers face peak demand in the winter period.

The delay also confirms analysts’ expectations that a prolonged battle between Shell and the Kremlin for control over the project last year would lead to delays.

Gazprom bought control in the $22-billion project after a prolonged crisis forcing Shell and its partners, Japanese Mitsui and Mitsubishi, to reduce their holdings.

But Khoroshavin said the delay had been caused purely by technical reasons. “The delay arose from seismic activities on the route of pipelines from (the island’s) north to the south,” Khoroshavin said.

The pipelines run 800km in parallel down the length of the island to the plant, crossing small and big rivers.

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