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RIA Novosti: Supervisory board to decide on Sakhalin LNG contracts soon

18:54 | 04/ 04/ 2006
MOSCOW, April 4 (RIA Novosti) – A board overseeing the gas production project on the Far East island of Sakhalin will select bidders for contracts on liquefied natural gas (LNG) supplies shortly, a project operator manager said Tuesday.
Contracts for supplies of 75% of the liquefied natural gas to be produced on Sakhalin have already been signed, while talks on the remaining 25% of LNG output are nearing an end, said Viktor Snegir, a manager for project operator Sakahlin Energy.
The Dutch-British-Japanese venture is developing two vast fields with estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas and is building Russia's first ever liquefied gas plant on Sakhalin with a designed capacity of 9.6 million tons a year.
The supervisory board – comprising three members of the Sakhalin administration, representatives of the industry and energy ministry, finance ministry, and the federal energy agency, and six Sakhalin Energy executives – will gather April 5 to discuss the contracts to be signed and will make its selection later, Snegir said.
He said the companies involved in existing contracts would retain their options, amounting to 0.5 million metric tons of LNG each, and that new contracts could be signed with new partners.
Sakhalin Energy, owned by Royal Dutch/Shell (55%) and Japan's Mitsui (25%) and Mitsubishi (20%), is working in Russia under a production sharing agreement that gives the company major tax breaks in exchange for a certain share of the output. The project is being implemented in difficult climate conditions and has been complicated by environmental obstacles and repeated spending delays on the part of the Russian authorities.

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