AFX Europe (Focus): EBRD to consult public over investment in Sakhalin energy project: “The EBRD, headquartered in London, said that consultations would focus on the environmental, social, health and safety aspects of the Sakhalin II project…”: Thursday December 15, 2005

LONDON (AFX) - The European Bank for Reconstruction and Development began consultations over investing in the Sakhalin II oil and gas project, whose majority owner is Anglo-Dutch energy group Royal Dutch Shell.

"The EBRD will consult the public before deciding whether to provide financing for the Sakhalin Energy Investment Company (SEIC) to develop the world's biggest oil and gas project, off the coast of Sakhalin Island in the Russian far east," the bank said in an official statement.

The EBRD, headquartered in London, said that consultations would focus on the environmental, social, health and safety aspects of the Sakhalin II project, Agence France-Presse said.

Sakhalin II is a key project in the exploration strategy of Shell as it seeks new sources of oil and gas to replace reserves lost in recent years. It is estimated that one bln barrels of oil can be recovered as well as 48.99 bln cubic meters of gas.

Shell owns 55 pct of SEIC, which is responsible for constructing the gas facility, but has signed a memorandum of understanding with Russian gas group Gazprom to swap 25 pct of shares for half of a Siberian field.

Japan's Mitsui and Mitsubishi hold 25 pct and 20 pct stakes, respectively, in SEIC.

Sakhalin Energy has asked the EBRD for financing for the second phase of Sakhalin II, after it borrowed funds for phase one in 1997.

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