AFX Europe (Focus): Russia's Gazprom likely to join Sakhalin 2 gas/oil project – report: “Sakhalin Energy, a company based in Yzhno-Sakhalinsk, is promoting the project and is owned 55 pct by Royal Dutch/Shell Group, 25 pct by Mitsui & Co and 20 pct by Mitsubishi Corp.“ (ShellNews.net) 28 Nov 04
Nov 28, 2004
TOKYO (AFX) - Russian state-owned gas firm Gazprom will likely invest more than 100 bln yen in a project to develop natural gas/oil off Sakhalin Island, Nihon Keizai Shimbun reported, citing sources close to the deal.
The world's largest gas company's investment in the so-called Sakhalin 2 project is expected to give it a stake of up to 25 pct.
Estimated to cost a total of 1.3 trln yen, the project has been one of the largest economic cooperation schemes between Japan and Russia.
Sakhalin Energy, a company based in Yzhno-Sakhalinsk, is promoting the project and is owned 55 pct by Royal Dutch/Shell Group, 25 pct by Mitsui & Co and 20 pct by Mitsubishi Corp.
Crude oil production started in 1999 and liquified natural gas (LNG) shipments are slated to commence in 2007. With Gazprom joining the project, natural gas shipments to Japan are almost certain to begin in 2007, the sources said.
Gazprom has offered to take an equity stake in Sakhalin Energy and the three shareholders in the firm are set to approve the move. The Russian company is likely to acquire shares in Sakhalin Energy in exchange for a concession it has in a Siberian oil field, the sources said.
By letting Gazprom take part in the scheme, which is one of the few Russian energy development projects being promoted solely by foreign capital, the Russian government apparently wants to expand its influence over it.
But Gazprom's participation will likely be beneficial for the three shareholders as well, because it will lessen their financial burden.
The project's total estimated cost has been raised to 1.3 trln yen from 980 bln due largely to tougher than expected conditions at the project site.
Its participation is also likely to make it easier to obtain various authorizations from the Russian government and raise funds, both of which are needed to boost the project's LNG shipment capacity to 15 mln tons from the originally targeted 9.6 mln tons, a move now under consideration by the consortium, the sources said.
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