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RIA Novosti (Moscow): Russian cos. won 87% of Sakhalin II contracts in 2005 – operator

Apr 6th, 2006
by admin.

15:41 | 06/ 04/ 2006
MOSCOW, April 6 (RIA Novosti) – Russian companies picked up 87% of contracts totaling roughly $1 billion on the Sakhalin II energy project in 2005, the project operator said Thursday.
Dutch-British-Japanese venture Sakhalin Energy is developing two vast fields on the Far East island that have estimated recoverable reserves of 150 million metric tons of oil and 500 billion cubic meters of gas.
Sakhalin Energy said in a statement that construction of Russia's first natural gas liquefaction plant was currently on schedule, and that deliveries to the Asia Pacific region and the U.S. would begin in 2008.
The project's supervisory board met on Wednesday to discuss an annual report on Russian companies' project involvement, and the implementation of the second phase of Sakhalin II. The statement said the board also discussed safety, environmental and labor protection, project financing, and staff training, as well as the timeframe for the project and how to push it forward.
It said Russian companies had won some $6 bln worth of contracts under the project since 1996.
The board includes six representatives from Sakhalin Energy and its shareholders, and six representatives of the Russian government and the Sakhalin Region administration.
Sakhalin Energy, owned by Royal Dutch/Shell (55%) and Japan's Mitsui (25%) and Mitsubishi (20%), is working under a production sharing agreement that gives the company major tax breaks in exchange for a share of production. The Sakhalin II project, which will likely cost over $20 billion, is based on a production sharing agreement signed in 1994.

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