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Sakhalin Energy (Once owned by Shell) Beats Targets for LNG, Crude Loading

BLOOMBERG

By Anna Shiryaevskaya

Dec. 30 (Bloomberg) — Sakhalin Energy, Russia’s only producer of liquefied natural gas, loaded 81 cargoes of the fuel and 59 cargoes of oil, beating its targets for the year.

The OAO Gazprom-led operator of the Sakhalin-2 project in Russia’s Far East exceeded the LNG target by more than 47 percent and the crude target by more than 11 percent, said Ivan Chernyakhovsky, a spokesman for Sakhalin Energy Investment Co.

“These are record results for the industry, given that this is the first year of LNG and year-round crude production,” Chernyakhovsky said by phone today. “Equipment was efficient, loadings were timely, and gas liquefaction was timely.”

Russia, holder of the world’s biggest gas reserves, in February inaugurated an LNG plant on Sakhalin Island, entering Asia Pacific markets after relying on pipelines to Europe for decades. The $22 billion Sakhalin-2 project began year-round oil exports in December last year after previously being limited to seasonal shipments because of ice.

Sakhalin-2 partners, who include Royal Dutch Shell Plc, had planned to send 55 LNG tankers from the plant this year. Gazprom owns 50 percent plus one share of Sakhalin Energy, while Shell owns 27.5 percent, Mitsui & Co. 12.5 percent and Mitsubishi Corp. 10 percent.

The plant, 160 kilometers (100 miles) off the northern tip of Japan’s Hokkaido, has LNG contracts with nine customers in Japan, one in South Korea and one in North America. The two- train liquefaction plant is due to reach full capacity of 9.6 million tons a year next year.

LNG is gas that is cooled to a liquid for transport by ship to markets not connected by pipelines. The fuel is received at import terminals and converted back to a gaseous form so it can be piped to users.

To contact the reporter on this story: Anna Shiryaevskaya in Moscow at [email protected]

Last Updated: December 30, 2009 07:42 EST

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