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Wednesday, September 05, 2007

Sakhalin II operator signs contract to deliver LNG to Japan

MOSCOW, August 3 (RIA Novosti) - Sakhalin Energy, the operator of the Sakhalin II oil and gas project in the Russian Far East, has signed an agreement with a Japanese energy company for liquefied natural gas (LNG) supplies. Sakhalin Energy said in a press release Friday: "Under the contract, 0.5 million metric tons of LNG will be delivered annually for 15 years beginning April 2011." Sakhalin Energy's Chief Executive Officer, Ian Craig, said: "We have worked closely with Chubu Electric [Power Co.] for some time and we are extremely pleased to have signed the final agreement today. We are looking forward to building a long-term mutually beneficial relationship with the company." LNG will be supplied from a plant in Prigorodnoye at Aniva Bay, southern Sakhalin, where 9.6 million metric tons of LNG will be produced annually, an amount almost equal to 5% of global LNG output. The bulk of the gas has already been bought out for 25 years in advance by Japanese, U.S. and South Korean companies. Sakhalin II, worth some $20 billion, is designed to produce LNG at two fields in southern Sakhalin. After Russian energy giant Gazprom bought a 50% stake plus 1 share in the project for $7.45 billion from its partners in late 2006, Royal Dutch/Shell, Mitsui and Mitsubishi now own 27.5%, 12.5% and 10%, respectively.

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