Foreigners Leave Sakhalin 2 Equally
It was confirmed yesterday that Gazprom will pay for its share in Sakhalin 2 in cash and not with assets. Shell will sell 27.5 percent of its share, not 30 percent as reported earlier. Mitsui and Mitsubishi will receive more money than had been thought. ITAR TASS news agency reports, citing the Japanese press, that they will each sell half of their shares, 22.5 percent in total. Shell head Jeroen van der Veer arrives in Moscow for the final round of negotiations, which will take place today.
Denis Borisov, an analyst with IK Sodis, commented that “for Shell, it is important to keep as much of its package in Sakhalin 2 as possible. If the company owns more than 20 percent in the project, but less than 50 percent, it will place reserves on its account and calculate profit proportionately to its share.” Borisov noted that the company will have to lower its proven reserves because of its decreasing share in the project. The Bloomberg news agency noted that Shell replaced only 67 percent of its proven reserves with new exploration last year. It main European competitor, BP, replaced 95 percent of its reserves.
Sakhalin 2 is being implemented on a product-sharing basis. The Anglo-Dutch Royal Dutch/Shell has a 55-percent share in it, and the Japanese companies Mitsui and Mitsubishi hold 25 and 20 percent, respectively. The project will develop the Piltun-Astokh and Lunskoe deposits on the continental shelf, which have reserves of 150 million tons of oil and 500 billion cu. m. of natural gas. Eight million tins of oil and 9.6 million tons of liquefied natural gas are to be exported from them a year.
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All the Article in Russian as of Dec. 21, 2006
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