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Gazprom enters Sakhalin II project


The shareholders of Sakhalin Energy Investment Company Ltd. (Sakhalin Energy), operator of the Sakhalin II project, today signed a Sale and Purchase Agreement with OAO Gazprom (Gazprom) to trigger the transfer of shares in Sakhalin Energy.

This transaction implements a protocol signed on December 21, 2006 in Moscow. Under its terms Gazprom acquires a 50% plus one share stake in Sakhalin Energy for $7.45 billion in cash. The other three shareholders, Royal Dutch Shell plc (Shell), Mitsui & Co. Ltd (Mitsui) and Mitsubishi Corporation (Mitsubishi), each dilute their stakes by 50%, to receive a proportionate share of the purchase price.

Gazprom will now hold 50% plus one share, Shell 27.5%, Mitsui 12.5%, and Mitsubishi 10%.

With LNG capacity effectively sold, Sakhalin II is moving to firmly establish its position on the global energy map as a reliable new energy source for customers. Through the Area of Mutual Interest (AMI) arrangement with Gazprom, the prospects for expansion of Sakhalin II through further LNG processing trains are enhanced.

In addition, the Ministry of Natural Resources of the Russian Federation has announced its approval of the revised Environmental Action Plan (EAP).

Gazprom Deputy Chairman Alexander Medvedev said, “Gazprom’s entry into Sakhalin II is a powerful impetus for implementation of this large scale development in the area of energy export to Asia Pacific and North America. In turn, it will facilitate the company’s strategy of phased entry into the global LNG market.”

Shell’s Executive Director, Exploration and Production, Malcolm Brinded said: “Gazprom’s entry into the Sakhalin Project is warmly welcomed. Combined with the government acceptance of the Environmental Action Plan, this is another important step for Sakhalin II. The AMI should create additional growth opportunities for the partners in the future.”

Mitsui’s Executive Director and Executive Vice President, Hiroshi Tada said: “Mitsui is pleased to welcome Gazprom to the Sakhalin II team. With the entry of Gazprom as Sakhalin Energy major shareholder, we are confident that in cooperation with the Russian Government, can bring this first Russian frontier LNG project to completion, as scheduled, for delivery of LNG to out customers in Japan, Korea and the United States. The milestone achieved today will no doubt contribute to further strengthening of the relationship between Russia and Japan, and will pave the way towards future development in Sakhalin region.”

Mitsubishi’s Senior Executive Vice President, Hisanori Yoshimura said: “Mitsubishi welcomes Gazprom into the Sakhalin II Project as a majority shareholder. I trust that this new combination of shareholders is the best team to accomplish timely start-up of LNG delivery to important customers in Japan, Korea, and North American West Coast. This is an important step towards Sakhalin Energy becoming the key LNG supplier for Asia Pacific market.”


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