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Sakhalin Energy to export about 50 LNG lots in ’09

Reuters

Wed Feb 18, 2009 12:22am EST

SAKHALIN ISLAND, Russia, Feb 18 (Reuters) – Sakhalin Energy will export about 50 cargoes of liquefied natural gas (LNG) this year, with the majority going to resource-hungry Japan, the head of the company said.

Russian gas export monopoly Gazprom (GAZP.MM) controls the Sakhalin-2 project, which the country’s energy ministry has said will produce 6 million tonnes of LNG this year, or about two-thirds of its annual capacity of 9.6 million tonnes.

Russia’s first LNG plant was commissioned on Wednesday.

“This year the project will ship around 50 145,000 cubic metre tankers of LNG and about 50 cargoes of oil, each 700,000 barrels,” Ian Craig, the chief executive of Sakhalin Energy, said at a briefing.

A Sakhalin energy spokesman said that the total LNG volumes are equivalent to 3.2 million tonnes for this year, about half the earlier government estimates of 6.0 million tonnes. But this is expected to rise to about 160 cargoes as the facility reaches full capacity next year.

About 65 percent of the plant’s output will be shipped to eight companies in Japan, the world’s top consumer of LNG, with the rest sold to South Korea and the LNG-hungry North American market via a Mexican terminal and on to the U.S. West Coast.

The first cargo is expected to load at the end of March, said Hisanori Yoshimura, member of the board of directors of Mitsubishi Corp (8058.T).

Tokyo Gas and TEPCO are likely to split the first cargo, company officials told Reuters at the event.

Sakhalin, located on the Russian Pacific island of the same name, was slated to launch at the beginning of 2009, after several delays since Septmber 2008.

Gazprom bought control of the $22 billion Sakhalin-2 project after a prolonged crisis that forced Royal Dutch Shell (RDSa.L), the project’s former leader, and its partners to reduce their holdings. Analysts had expected the battle would lead to delays.

Shell is now a minority shareholder, along with Japan’s Mitsubishi (8058.T) and Mitsui (8031.T).

The battle became symbolic of resource nationalism in Russia and the state’s desire and ability to renege on previous deals. But resource-poor Japan seems unshaken by the deal’s murky past.

Gazprom is the world’s largest gas company, supplying a quarter of Europe’s gas. (Reporting by Tanya Mosolova; Editing by Jonathan Leff and Ramthan Hussain)

 

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