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26 Jan, 2023 11:09

New Asian contracts to double Russian gas project's revenue – Reuters

Production of liquefied natural gas surged by as much as 10% last year, the operator of Sakhalin-2 says
New Asian contracts to double Russian gas project's revenue – Reuters

The Sakhalin-2 liquefied natural gas (LNG) project is expected to generate twice as much revenue in 2023 compared to its earnings before the Ukraine-related sanctions rained down on Russia’s energy sector, Reuters reported on Thursday, citing industry analysts.

The boost is attributed to long-term contracts with clients from the Asian region, along with higher global energy prices. 

Renewed deals with Asian buyers are expected to secure demand for up to 6.5 million tons of the super-chilled fuel annually from Sakhalin 2, according to calculations by the agency and contractual volume data provided by the GIIGNL international group of LNG importers.

The contracts could earn up to $4.5 billion in revenue for Sakhalin 2 shareholders, which include state-run energy giant Gazprom and Japanese companies Mitsubishi and Mitsui, according to Masanori Odaka, a senior analyst on Rystad Energy's gas and LNG team.

The enterprise is expected to generate another $7.45 billion in 2023 if production remains in line with 2022, while its sales on the spot market are retained at 4.9 million tons, Alexei Kokin, chief analyst at Russia's Otkritie brokerage, told Reuters.

On Thursday, Sakhalin Energy, the operator of the project, said it produced 11.5 million tons of LNG and some 3.7 million tons of its Sakhalin blend crude oil at the Sakhalin-2 facilities in 2022, exceeding its production plan. That is 10% more than the project produced in the previous year. 

The company has managed to continue production despite “a period of unprecedented pressure from external factors on production and economic activity,” according to Andrey Oleinikov, Sakhalin Energy's managing director.

According to the company’s statement, LNG and oil shipments in 2022 were delivered to the buyers on time in full compliance with the terms of Stock Purchase Agreement, while its production remained on schedule. The major markets for exports are Japan, China, South Korea and Indonesia, Sakhalin Energy said.

For more stories on economy & finance visit RT's business section

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