[home page][map of the server][news of the server][forums][publications][Yabloko's Views]

Rosbalt, March 12, 2004

Sakhalin Energy Concludes Agreement to Provide Japan with Natural Gas

YUZHNO-SAKHALINSK, March 12. The company Sakhalin Energy has as part of its Sakhalin II priject concluded an agreement with Toho Gas, one of Japan's largest gas distribution companies, to provide it with liquefied gas, according to a statement issued to Rosbalt by the press office of Sakhalin Gas. According to the signed document, the volume of gas to be delivered amounts to 0.3 million tons a year for approximately the next 23 years. In this way, the total volume of gas previously purchased as part of the Sakhalin II project (concluded in four agreements) now totals 3.1 million tons for the next 20 or more years.

According to the announcement, the deal further establishes Sakhalin as a new strategic provider of natural gas to Japan, and allows the Asia Pacific region to be considered a major new market for Russian energy providers. The d! eal also confirms the emergence on the international gas market of a major new participant in the form of the Russian Federation and Sakhalin Energy.

Today, the heads of the named companies signed the fundamental terms of the ! agreement regarding the long-term delivery of liquefied natural gas, whereby the first deliveries are scheduled to begin in 2010. The sides are continuing their negotiations with the goal of signing an agreement for the sale and purchase of liquefied natural gas.

Two major events in the operation of Sakhalin Energy are associated with the Toho Gas deal. At the end of December last year, Russian regulatory authorities approved a feasibility study for the construction phase of the Sakhalin II project, and in January work began on the construction of an above-ground oil and gas pipeline system, whereby offshore gas from the northern part of the island will be transported south to a liquefied natural gas plant. Construction of the factory has already begun in Prigorodnoe, in the south of Sakhalin. It will become the first liquefied natural gas factory constructed in Russia. Once fully operational, it will be able to deliver 9.6 million tons of gas a year. The factory will consist of two production lines for the liquefication of natural gas, each capable of producing 4.8 million tons per year. To date, it is the largest production line for liquefied natural gas in the world.

The Sakhalin II project has been worked out on the basis of an agreement regarding the division of liquefied natural gas production. Recoverable reserves from the Pultin-Astohskovo and Lunskovo fields involved in the project consist of 185 million tons of oil and 800 billion cubic meters of gas. Recovery of oil from the project began in summer 1999.

Shareholders in Sakhalin Energy Investment include the British-Dutch Royal Dutch/Shell (55%), the Japanese company Mitsui (25%), and Mitsubishi (20%). The joint-stock company, Sovkomflot, a wholly government-owned company, is responsible for all sea transport


See also:

Production Sharing Agreements (PSA)

Rosbalt March 12, 2004

[home page][map of the server][news of the server][forums][publications][Yabloko's Views]

Project Director: Vyacheslav Erohin e-mail: admin@yabloko.ru Director: Olga Radayeva, e-mail: english@yabloko.ru
Administrator: Vlad Smirnov, e-mail: vladislav.smirnov@yabloko.ru