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22 Dec, 2006 03:15

Gazprom buys into Sakhalin-2 project

Gazprom buys into Sakhalin-2 project

Russian energy giant Gazprom has formally acquired a controlling stake of 50% plus one share in Sakhalin-2, the international oil and gas project in the country's Far East.

The deal was signed by the 4 participating companies – Gazprom, Royal Dutch Shell, and the Japanese firms Mitsui and Mitsubishi. 

From now on Gazprom will control 50% plus one share of the project.

“Gazprom will now become the biggest shareholder in the project and together with other shareholders, it will make all necessary efforts to get the project started as soon as possible,” Alexey Miller, Gazprom CEO stressed.

The money at stake is immense – for the controlling stake Gazprom will pay almost $US 7.5 BLN – that’s approximately 75% of all the cash the company has. And the agreement is all cash.

Jeroen van der Veer, Shell CEO mentioned that “this is a straightforward cash deal in which Gazprom gets 50% + 1 share. So they've got a controlling stake.”

The environmental part of the project was mentioned by all participants, after recent criticism from the Russian environmental watchdog, and it was in the interest of the parties involved to comply with all the demands. They mostly concentrated on the liquefied natural gas plant, which construction according to environmental estimates, caused around 10 BLN roubles damage. Gazprom and other participants promised to deal with it, and not to create further problems. Besides, they said, the project will be beneficial both for the population of Russia's Far East and for the region.

As for the start of the project, the Russian Minister of Industry and Energy Viktor Khristenko said they will work to the schedule. The first gas supplies will be delivered in the beginning of 2009.

“Russia will hold a very objective and supportive position. Russian government and investors are eager to complete the project,” Russian President Vladimir Putin said.

Now Sakhalin-2 has the support of the Russian government and of the Russian environment watchdog, the Ministry of Natural Resources said that no matter how big the deal is now they will continue to watch over it thoroughly.