| Shell
welcomes first gas contract for Sakhalin project
Posted: 12 May 2003
The Royal Dutch/Shell Group of Companies (Shell) today welcomed
the signing of an agreement between Sakhalin Energy and Tokyo Gas
for the long-term supply of liquefied natural gas (LNG) to the Japanese
market for a period of 24 years.
Sakhalin Energy and Tokyo Gas have signed a Heads of Agreement
(HOA) for the supply of up to 1.1 million tonnes a year of LNG,
with first deliveries expected to start in 2007.
The two companies will now continue negotiations to enable a fully
termed sale and purchase agreement (SPA) to be signed by 2004.
The Tokyo Gas HOA, which is subject to the Sakhalin Energy joint
venture company declaring Development Date, itself dependent on
the company's shareholders taking a final investment decision, represents
another significant step towards the development of the approximately
$10 billion Sakhalin-II, Phase 2 integrated oil and gas project.
Shareholders Shell, Mitsui and Mitsubishi are expected to take
a final investment decision in the first half of this year.
Shell Gas & Power CEO Linda Cook said: “This represents
a breakthrough for Sakhalin Energy, for Russia and for Shell. We
are delighted that Tokyo Gas shares our confidence in Sakhalin Energy’s
ability to offer a competitive and reliable source of long term
gas supply.”
The Sakhalin-II Production Sharing Agreement is operated by Sakhalin
Energy Investment Company (Shell 55 per cent, Mitsui 25 per cent,
Mitsubishi 20 per cent).
Phase 1, in operation since 1999, produces oil from an offshore
platform during the ice-free season and exported 10.77 million barrels
of oil in 2002.
Phase 2 of the project will involve the construction of two new
platforms, oil and gas pipelines and processing facilities including
an LNG plant with a planned capacity of 9.6 million tons per year.
LNG sales are primarily targeted at traditional buyers in Japan,
Korea, Taiwan and emerging markets in Asia Pacific.
Posted by Richard Price,
Editor Pipeline Magazine
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